Preamble

The House met at a Quarter before Three of the Clock, Mr. SPEAKER in the Chair.

PRIVATE BUSINESS.

Private Bills [Lords] (Standing Orders not previously inquired into complied with),—

Mr. SPEAKER laid upon the Table Report from one of the Examiners of Petitions for Private Bills, That in the case of the following Bills, originating in the Lords, and referred on the First Reading thereof, the Standing Orders not previously inquired into, which are applicable thereto, have been complied with, namely:—

Coventry Extension Bill [Lords].
Grand Union Canal Bill [Lords].

Bills to be read a Second time.

Provisional Order Bills (Standing Orders applicable thereto complied with),

Mr. SPEAKER laid upon the Table Report from one of the Examiners of Petitions for Private Bills, That in the case of the following Bill, referred on the First Reading thereof, the Standing Orders, which are applicable thereto, have been complied with, namely:—

Ministry of Health Provisional Orders (Accrington and Leicester) Bill.

Bill to be read a Second time Tomorrow.

NEW WRIT.

For the County of Glamorgan (Ogmore Division), in the room of the Right honourable Vernon Hartshorn, O.B.E., deceased.—(Mr. T. Kennedy.)

Oral Answers to Questions — HOUSING.

GLASGOW CORPORATION SCHEMES (SLATES).

Mr. HARDIE: 1.
asked the Secretary of State for Scotland the quantity of slates used in Glasgow Corporation
housing schemes during 1926, 1927, and 1928, giving the country of their origin; and similar information for 1928, 1929, and 1930?

The SECRETARY of STATE for SCOTLAND (Mr. William Adamson): I am making inquiries, and will communicate the result to my hon. Friend as soon as possible.

STATE-AIDED HOUSES (RENTS).

Mr. McELWEE: 61.
asked the Minister of Health whether he will introduce legislation to adjust the rent payable on all State-aided houses built to let to the ability of the tenant to pay?

The PARLIAMENTARY SECRETARY to the MINISTRY of HEALTH (Miss Lawrence): Local authorities are already equipped with extensive powers of the kind suggested by my hon. Friend. These powers were much increased by the Housing Act, 1930, and, as at present advised, my right hon. Friend does not think further legislation is necessary.

Mr. McELWEE: Will the hon. Lady convey to the Minister the fact that there are people with incomes of £15 a week who are receiving public assistance by way of subsidies for rent from public funds subscribed by people who are only getting £2 a week; and could not that be adjusted?

Miss LAWRENCE: Perhaps my hon. Friend will communicate with me on the matter.

Captain WATERHOUSE: In view of these facts, will the hon. Lady consider doing away with all subsidised houses?

UNOCCUPIED DWELLINGS.

Mr. CHARLES WILLIAMS: 60.
asked the Minister of Health whether he has any information to show how many private houses having a rateable value of above £150 per annum are at present unoccupied, or if he can give the number of such houses on any convenient date during the last two years?

Miss LAWRENCE: My right hon. Friend regrets that the information desired by the hon. Member is not available.

Oral Answers to Questions — COAL INDUSTRY.

OUTPUT.

Mr. GORDON MACDONALD: 2.
asked the Secretary for Mines the output per man per shift in the mining industry of Great Britain in 1913 and in 1930, giving separate figures for Lancashire and Cheshire?

The SECRETARY for MINES (Mr. Shinwell): The output per man-shift worked by all workers employed in the coal mines in Great Britain in 1930 was 21.63 cwts. and in Lancashire and Cheshire 17.32 cwts. I regret that similar information is not available for 1913 but in June, 1914, the corresponding figures were 20.32 cwts. and 15.19 cwts., respectively.

WAGES.

Mr. G. MACDONALD: 3.
asked the Secretary for Mines the average daily earnings in the mining industry of Great Britain in 1913 and for 1930, giving separate figures for Lancashire and Cheshire?

Mr. SHINWELL: In 1930, the average cash earnings per man-shift worked by all workers in the coal mines in Great Britain was 9s. 3½d., and in Lancashire and Cheshire 9s. 2¾d., as compared with 6s. 7d. and 6s., respectively, in November, 1913.

SUPPLIES, NORTH-EAST LANCASHIRE.

Captain Sir WILLIAM BRASS: 4.
asked the Secretary for Mines whether he is aware that owing to the operation of the quota system under the Coal Mines Act considerable congestion of empty wagons exists on the sidings, resulting in a difficulty of obtaining necessary supplies of coal in North-East Lancashire; and what action he proposes to take to remedy this state of affairs?

Mr. SHINWELL: Congestion of empty wagons at railway sidings after holiday periods such as Easter, when the majority of the pits close for some days, is not unusual. Nevertheless, my information is that there is no shortage of coal in North-East Lancashire at the present time. If the hon. and gallant Member has any particular cases in mind, perhaps he will let me have details of them.

Sir W. BRASS: Do I understand that the reason for the shortage which the hon. Gentleman gives is the holidays, and not the quota system?

Mr. SHINWELL: I have not admitted any shortage.

Lieut.-Commander KENWORTHY: Has there not been a congestion of railway wagons for many years, and is it not largely owing to private wagons?

Sir W. BRASS: Do I understand that the hon. Gentleman has denied that there is a shortage at all in North-East Lancashire? I have evidence that there is.

Mr. SHINWELL: I am informed that there is no shortage, but, if the hon. Member has details, perhaps he will let me have them.

PIT-HEAD PRICES.

Mr. HERRIOTTS: asked the Secretary for Mines the average price of coal at the pit-head for the years 1929 and 1930, respectively, and also the price for the quarter ended the 31st March, 1931?

Mr. SHINWELL: The average pithead proceeds per ton disposable commercially in 1929 was 13s. 11d. and in 1930, approximately 14s. 1d. I regret that later information is not yet available.

Mr. HERRIOTTS: What is the reason for the information not being available, seeing that when I put down a question some time ago, I was informed that the information would be available soon?

Mr. SHINWELL: The information is collected quarterly, and it is not available for the last quarter.

Mr. HERRIOTTS: Has the retail price of coal throughout England been raised during the last thee months?

Mr. SHINWELL: I should require notice of that question.

Lieut.-Colonel Sir FREDERICK HALL: Surely the hon. Gentleman can reply to that question, seeing it is a well-known fact that there has been an increase in price?

Mr. SHINWELL: Speaking off-hand, I think that there has been a reduction.

EXPLOSION, MEASHAM.

Mr. ERNEST WINTERTON: 7.
asked the Secretary for Mines how many men were working underground in the Minorca pit, Measham, at the time of the explosion on Sunday, 12th April; and how
this number compares with the number working underground on the corresponding shift on each of the days 6th, 7th, 8th, 9th, 10th and 11th April?

Mr. SHINWELL: The explosion occurred on the morning of Sunday, 12th April, and 109 persons were employed underground at that time, some of whom on other days were usually employed on the afternoon shift, and some on the morning shift. The number of persons employed underground on the morning shift on the preceding days was:

6th April
(Easter Monday)
Nil


7th April
…
…
…
59


8th April
…
…
…
188


9th April
…
…
…
195


10th April
…
…
…
196


11th April
…
…
…
170

Mr. WINTERTON: Is the hon. Gentleman aware that his figures show that on Sunday more than 50 per cent. of the men available in the pits were working?

Mr. SHINWELL: That is perfectly true, but it was at their own request, and it had nothing to do with the production of coal.

Mr. WINTERTON: Is the hon. Gentleman aware that part of this labour at least had nothing to do with repair work, but had to do with the cutting of coal?

Mr. SHINWELL: That is not my information. If the hon. Member has any details of his allegation, perhaps he will communicate them to me.

Mr. WINTERTON: I will supply them.

Mr. WINTERTON: 8.
asked the Secretary for Mines whether he has received a report on the explosion at the Minorca Pit, Measham, in the South Derbyshire coalfield, on Sunday, 12th April, by which a number of men were severely injured and of whom one has since died; and whether he is in a position to state the cause of the explosion?

Mr. SHINWELL: I have received a full report from the divisional inspector of mines, who, accompanied by representatives of both the management and the workmen, has made full investigation into the cause of this explosion. Pending the conclusion of the inquest, which was opened yesterday, it would not be proper for me to make any statement as to the cause of the explosion.

Mr. WINTERTON: Without in any way anticipating the verdict at the inquest, will the hon. Gentleman agree that this explosion shows the need for hastening the immediate adoption in all pits of automatic gas detectors which will warn men of the presence of gas?

Mr. SHINWELL: I think the hon. Member had better await the result of the inquiry.

Oral Answers to Questions — IRISH FREE STATE (PRIVY COUNCIL APPEALS).

Sir KINGSLEY WOOD: 9.
asked the Secretary of State, for Dominion Affairs what communications he has recently received from the Irish Free State Government on the subject of Privy Council appeals; and whether any amendment of the Irish Treaty on this matter is contemplated?

The SECRETARY of STATE for DOMINION AFFAIRS (Mr. J. H. Thomas): As the right hon. member will be aware, the question of appeal to the Judicial Committee of the Privy Council was raised by the representatives of the Irish Free State at the Imperial Conference of 1930, but no recommendation was made by the conference, and the position remained as it was left after the Imperial Conference of 1926. No official communication on the subject has been received from His Majesty's Government in the Irish Free State since the termination of the conference.

Sir K. WOOD: I take it that, if there are any developments in this matter, the right hon. Gentleman will communicate them to the House?

Mr. THOMAS: If there are any developments, they will be considered, but before any agreement can be reached, obviously the matter is one for the House of Commons.

Mr. ROSS: Will the right hon. Gentleman bear in mind that this is a precious safeguard much prized by ex-Unionists in Ireland?

Mr. THOMAS: I am well aware of that fact, and of the representation on the subject.

Mr. HURD: And also by French Canadians in Canada?

Mr. THOMAS: Canada has nothing to do with this question.

Oral Answers to Questions — DOMINIONS (IMPORTS FROM RUSSIA).

Mr. C. WILLIAMS: 10.
asked the Secretary of State for Dominion Affairs whether any of the Dominions have controlled their imports from Soviet Russia by legislation?

Mr. THOMAS: So far as I am aware, the only Dominion which has adopted any special measure of control over imports from the Soviet Union is Canada.

Oral Answers to Questions — TRADE AND COMMERCE.

COTTON INDUSTRY.

Mr. REMER: 13.
asked the President of the Board of Trade the policy of the Government with reference to the cotton industry; and if that policy will involve legislation or financial assistance?

The PRESIDENT of the BOARD of TRADE (Mr. William Graham): A meeting of the Joint Committee of Cotton Trade Organisations was held on the 9th April to consider certain resolutions, of which the most important was one dealing with the question of the adjustment of productive capacity to demand. The resolution ended with a proposal that an investigator or investigators should be appointed, with statutory powers of inquiry, whose duty it would be to secure information for the use of the executive of the Joint Committee in preparing a scheme for maintaining a closer relation between capacity and demand. This resolution has been referred to the Central Committees of the various organisations both of employers and operatives which are represented on the Joint Committee, with a request that it should be considered and a decision reached upon it as soon as possible. It will then be possible for the Joint Committee to take a vote by organisations on the resolution. Until this has been done, it would be inappropriate for His Majesty's Government to express an opinion on the questions to which the resolution gives rise.

Mr. REMER: Have the Government any policy of any kind to deal with the trouble in the cotton trade?

Mr. GRAHAM: Yes, a definite policy in these matters, and we have been pursuing it diligently through all these negotiations.

Mr. HAMMERSLEY: in the event of the resolution being passed by the various constituent organisations to which the right hon. Gentleman refers, is it the intention of the Government to propose legislation to give statutory authority to it?

Mr. GRAHAM: I cannot give any decision on that matter this afternoon. We had better get the verdict of these bodies, and that will be considered among many other matters which I must take into account.

Sir W. BRASS: When the right hon. Gentleman has the verdict, does he propose to take any action on the matter, or to do the same as he is doing now—nothing?

Mr. GRAHAM: That point has been covered in the reply which I have just given.

Mr. DOUGLAS HACKING: 25.
asked the President of the Board of Trade whether he has considered the recent letter sent to him by the President of the Manchester Chamber of Commerce in connection with the gravity of the present position of the cotton export trade to India; and, if so, whether he will tell the House the nature of his reply?

Mr. GRAHAM: Yes, Sir. I have received this letter and have informed the chamber that their views have been brought to the notice of the Secretary of State for India.

Mr. HACKING: Will the right hon. Gentleman see that the Prime Minister has a copy of that letter, so that he may know what Manchester thinks about the Government?

Mr. GRAHAM: The Prime Minister is familiar with the position, and in any case it has already been made plain that a reply will be sent in due course.

Sir W. BRASS: Can the right hon. Gentleman say whether he has any news about the continued boycott in India?

FRANCE (TRADE NEGOTIATIONS).

Sir K. WOOD: 15.
asked the President of the Board of Trade if he can make any
statement concerning the negotiations in relation to a new trade agreement between this country and France?

Mr. W. GRAHAM: The only trade negotiations with France that are in contemplation are those arising out of the proposals in regard to tariff reductions put forward to the French Government as well as to the Governments of six other countries to which I have already referred in this House. I have taken the opportunity of the presence of certain French officials in this country to exchange views in a preliminary way in regard to this matter, but no detailed negotiations have yet been undertaken.

Sir K. WOOD: How is the matter progressing; is it getting on very well?

Mr. GRAHAM: I adhere now as always to my optimistic views.

Mr. HANNON: Is it not a fact that there is a very strong feeling in France against any concession in tariffs to this country?

Mr. GRAHAM: That is rather difficult to cover in a supplementary answer. There are certain views of French industrialists, but there is still the question of the reply of the French Government to the representations that we have made.

Sir HENRY BETTERTON: Will these negotiations consider at all the free import of French lace into this country.

Sir W. BRASS: rose—

Mr. SPEAKER: This is the same old fiscal Debate.

IRON AND STEEL INDUSTRY.

Mr. ARTHUR MICHAEL SAMUEL: 16.
asked the President of the Board of Trade the details of the principles under which he proposes to reorganise the iron and steel industry in terms of public utility corporations?

Mr. W. GRAHAM: I fear I can add nothing within the limits of a Parliamentary reply to previous statements regarding this industry. The most suitable occasion would appear to be the Board of Trade Vote.

Mr. SAMUEL: Does the right hon. Gentleman remember what he said at Scunthorpe 10 days ago? Are we to assume he was merely speaking at large
just as he did about the increase of the cotton trade with India, three weeks ago?

Mr. GRAHAM: I emphatically repudiate the suggestion in that question. I adhere to every word I said at Scunthorpe.

WRAPPING PAPER (DUTY).

Mr. FREEMAN: asked the President of the Board of Trade whether he has any figures indicating the drop in prices, and the consequent saving to the community per annum, as a result of the cessation of import duty on the 1st May of packing and wrapping paper?

Mr. W. GRAHAM: I regret that the available information is not such as to enable an estimate to be made of the future course of prices.

Mr. FREEMAN: Is the right hon. Gentleman aware that certain Continental firms have already quoted a reduction of 16 per cent. in their prices, to take effect as soon as this duty is cancelled?

Mr. GRAHAM: Yes, that may be so, but what my hon. Friend will observe is that this question relates to events after the 1st May, and I have no official information, and could not forecast the result.

Mr. HANNON: Is it the definite intention of the Government to allow the duties to lapse?

Mr. GRAHAM: That was declared to be the policy of the Government very shortly after we took office.

GLOVE INDUSTRY.

Major BEAUMONT THOMAS: 18.
asked the President of the Board of Trade if he will make a statement as to the causes of the reduction of the output in the glove industry for the months of January and February of this year as compared with the corresponding months in the year 1930?

Mr. W. GRAHAM: The latest figures of the output of gloves furnished to the Board of Trade by the industry relate to the year 1930. I have, however, seen a statement issued by the industry giving later figures and discussing them. I do not think the subject is one that can be dealt with by question and answer, but the hon. and gallant Member may wish to raise it on the Vote for my Department.

STANDARDISATION (CONFERENCE RECOMMENDATIONS)

Mr. ALBERY: 21.
asked the President of the Board of Trade whether he will state what action has been taken as a result of the conference on standardisation?

Mr. W. GRAHAM: With the hon. Member's permission I will circulate a statement in the OFFICIAL REPORT.
Following is the statement:
The recommendations contained in the report of the conference on standardisation, and endorsed by the Imperial Conference, are being followed up in various directions. The British Engineering Standards Association is extending its scope and will I hope as a result be able to enlarge its activities; and steps are being taken to develop further the already existing co-operation between the Association in this country and the central standardising bodies in other parts of the Empire on the lines suggested by the conference. The standard specifications issued by the Association are adopted wherever possible by the purchasing departments of the Government of the United Kingdom, and endeavours are being made to encourage their adoption to the greatest possible extent by local authorities. With the aid of the Central Committee on Standardisation and Simplification the Board of Trade are also endeavouring to encourage the extension of that form of standardisation commonly known as simplification, and in this connection an index is being compiled to specifications in use by large buyers and others. As regards fundamental standards of weight and measure, certain of the competent authorities in the Empire are considering the acquisition and maintenance of suitable standards and have been in correspondence with the Board of Trade and the Department of Scientific and Industrial Research with regard to this matter.

INDUSTRIAL REORGANISATION (CREDITS).

Captain PETER MACDONALD: 26.
asked the President of the Board of Trade whether he has any information as to the extent to which long-term credits for industrial reconstruction and, in particular, the electrification of industry are offered by private finance organisations?

Mr. W. GRAHAM: I have a certain amount of information on this subject which, however, it would not be possible adequately to summarise within the limits of the reply to a Parliamentary question. If the hon. and gallant Member will send me particulars of any cases in which he is interested I may be able to be of assistance.

RUSSIA.

Mr. McELWEE: 34.
asked the President of the Board of Trade whether he is aware that Russian doors are available at London and Hull at 5s. 10d. each after the payment of transport across Europe to an ice-free port, and that the cost of the same rough timber at the same ports is 6s. per door; and will he ascertain why the raw material is dearer since it may be imported as a deck cargo?

Mr. W. GRAHAM: I understand that the doors are offered at the price stated if taken in very large quantities, but my information is that timber of the kind used in them is obtainable in this country at a much lower cost than is indicated in the question.

Commander BELLAIRS: Is that price not due to the fact that it was the product of slave labour?

Mr. GRAHAM: I can never agree with that suggestion.

Mr. SMITHERS: 42.
asked the Secretary to the Overseas Trade Department whether, in view of the reactions on the commerce of this country, he will issue a White Paper giving as full information as is possible of the progress of the five-year plan in Soviet Russia?

Mr. SHINWELL: I would refer the lion. Member to the reply given on this subject to the hon. Member for Newcastle North (Sir N. Grattan-Doyle) on 23rd March, of which I am sending the hon. Member a copy.

DOMINION AND COLONIAL GOODS (BRITISH TRADE).

Commander BELLAIRS: 41.
asked the Secretary to the Overseas Trade Department what are the chief trades in which the different Dominion and Colonial Governments sell their products on the
British market through the services of a particular agent, as distinguished from a general commission agent?

Mr. SHINWELL: My hon. Friend is not aware of any product which Dominion or Colonial Governments as such sell in this country.

PILCHARDS (IMPORT DUTY, ITALY).

Mr. C. WILLIAMS: 19.
asked the President of the Board of Trade whether he is in a position to make any further statement with regard to the Italian import duty on pilchards from this country?

Mr. W. GRAHAM: I am afraid I am not in a position to add anything to the answer which I gave to the hon. Member on 24th February.

Mr. WILLIAMS: When will the right hon. Gentleman be in a position to implement his promise?

Mr. GRAHAM: I have already informed the hon. Member that I will make a representation to the Italian Government on the subject whenever there is what appears to be a favourable opportunity, but that time has not yet come.

Major COLFOX: Have the Government done nothing whatever?

Mr. GRAHAM: That is not the case. I have already given the hon. Member the information that these pilchards have haunted us for about 18 months.

Mr. WILLIAMS: Will the right hon. Gentleman try to make an opportunity by giving an opening?

Oral Answers to Questions — COMPANIES ACT.

Captain AUSTIN HUDSON: 20.
asked the President of the Board of Trade the number of public companies as at Tuesday, 28th April, which have not complied with the provisions of Section 110 of the Companies Act, 1929; and what steps he is taking to reduce to nil the number of companies which have now been in default for over four months?

Mr. W. GRAHAM: The number of outstanding cases of default in respect of 1930 has been reduced to 137. These cases are with the Solicitor to the Board of Trade who is taking such action as may be necessary to secure the return.

Oral Answers to Questions — FLOUR AND BREAD PRICES.

Sir K. WOOD: 14.
asked the President of the Board of Trade whether he has now received a report from the Food Council as to the reasonableness of the new scale of the price of flour?

Mr. W. GRAHAM: No, Sir. I understand that the council are experiencing great difficulty in obtaining the information which they think necessary.

Mr. D. G. SOMERVILLE: 31.
asked the President of the Board of Trade the fluctuations in the price of bread during the last six months; the corresponding fluctuations in the price of wheat from which the bread is made; and the percentage of the price of a four-pound loaf which is represented by labour?

Mr. GRAHAM: As the answer contains a table of figures, I will, with the hon. Member's permission, circulate it in the OFFICIAL REPORT.

Mr. SOMERVILLE: Is it not a fact that the price of bread has gone up 1d. within the last four weeks, although the price of wheat has fallen? Has there not been a consistent rise in the price of bread, although the price of wheat is coming down?

Mr. GRAHAM: There was a certain rise very recently. The statistics which I have given will show on examination the position from October to March. I can only add that if effective powers are wanted to deal with this matter they will be found in the Consumers' Council Bill.

Mr. SOMERVILLE: In view of the fact that the Government are supposed to look after the interests of the community, what steps do they propose to take?

Mr. GRAHAM: Those steps are embodied in the Consumers' Council Bill, which the hon. Member's party has done its best to resist.

Mr. SOMERVILLE: In view of the very unsatisfactory attitude of the Government, I propose to raise this matter on the first available opportunity?

Following is the answer:

The prices of the undermentioned descriptions of wheat and of the four-pound loaf during the last six months are shown in the following table:


—
Average price in—


1930.
1931.


Oct.
Nov.
Dec.
Jan.
Feb.
March.



Per cwt.


Wheat.
s.
s.
s.
s.
s.
s.


English "Gazette Average"
6.96
6.58
6.04
5.50
5.13
5.17


Imported Argentine, spot, Liverpool.
6.65
6.22
5.56
5.01
5.13
4.80


Imported Northern Manitoba No. 2 description, ex ship, London.
7.08
6.60
6.12
5.94
6.33
6.12


Imported—average declared value (c.i.f.) of all wheat imported into the United Kingdom.
7.13
6.38
5.95
5.72
5.55
5.23



Per 4 lbs.


Bread.
d.
d.
d.
d.
d.
d.


Average retail price in the United Kingdom, as compiled by the Minister of Labour.
8.00 (Nov. 1st)
7.50 (Dec. 1st)
7.50 (Jan. 1st, 1931)
7.25 (Jan. 31st)
7.00 (Feb. 28th)
7.00 (Apl. 1st)

Owing to the considerable variation from district to district in the cost of labour represented in the four-pound loaf it is not possible to give a satisfactory estimate for the United Kingdom as a whole.

Oral Answers to Questions — EX-ENEMY DEBTS DEPARTMENT.

Mr. DAY: 23.
asked the President of the Board of Trade whether he can state the staff of the clearing house (ex-enemy debts) at present employed either in Great Britain or overseas; and whether he contemplates winding up this Department in the near future?

Mr. W. GRAHAM: I would refer my hon. Friend to the reply given to a similar question on the 1st April, which shows the substantial progress made towards the completion of the work of this office.

Mr. DAY: Can the right hon. Gentleman say when he anticipates that the work of this Department will be finished?

Mr. GRAHAM: No, I have frequently explained to the House that everything is being done to wind up the work, but that there are still many very difficult and highly technical cases under consideration.

Oral Answers to Questions — MERCANTILE MARINE.

LINE-THROWING APPLIANCES.

Mr. DAY: 24.
asked the President of the Board of Trade whether he has any statistics and can state the number of ships at present carrying line-throwing appliances under the provisions of the Merchant Shipping (Line-throwing Appliance) Act, 1928 and have surveyors of his Department reported any difficulties with reference to the statutory rules made thereunder?

Mr. W. GRAHAM: The Board of Trade have no figures showing the number of ships which are at present carrying line-throwing appliances under the provisions of the Merchant Shipping (Line-throwing Appliance) Act, 1928, and the Statutory Rules made thereunder. No difficulties have been reported by the Board's surveyors in connection with this matter.

RUSSIAN CARGOES.

Mr. HERRIOTTS: 29.
asked the President of the Board of Trade what percentage of the total shipments of Russian exports were carried in British ships in
the years 1928, 1929 and 1930, respectively, and the amount received by British shipowners in charges?

Mr. W. GRAHAM: I regret that the desired information is not available.

OLD VESSELS (RUSSIAN PURCHASES).

Mr. GRAHAM WHITE: 30.
asked the President of the Board of Trade if he has any information as to the number of old ships sold to Russia in the last two years?

Mr. W. GRAHAM: The number of ships reported to the Board of Trade as having been removed from the Register of the United Kingdom on account of sale to Russian interests during the years 1929 and 1930 was four.

WASTE OIL (DISCHARGE).

Mr. WHITE: 57.
asked the Secretary of State for Foreign Affairs if, in view of the fact that the damage arising from the discharge of oil waste from ships is caused by the ships of all nations, he will bring the matter before the League of Nations with a view to international action?

The UNDER-SECRETARY of STATE for FOREIGN AFFAIRS (Mr. Dalton): His Majesty's Government would welcome effective international action to prevent such damage, but up to the present it has been impossible to secure agreement among the principal maritime Powers. The hon. Member's suggestion will, however, be borne in mind.

Oral Answers to Questions — COAST EROSION.

Mr. PYBUS: 27 and 28.
asked the President of the Board of Trade (1) whether, to prevent the continuance of coast erosion, he will call a conference with a view to reconciling the differences between the interests concerned and allowing an amended Bill to proceed through the House;
(2) whether, in view of the difficulties in passing a Coast Protection Bill, he will as a temporary measure introduce legislation to prevent the weakening of the coast defences by the removal of gravel from the foreshore?

Mr. W. GRAHAM: I would refer the hon. Member to replies previously given
on this subject and especially to the replies given by the Prime Minister and myself to the hon. and gallant Member for Louth (Lieut.-Colonel Heneage) on the 29th January, 1930, and the 3rd February last, respectively. Progress cannot be made with any Bill on this subject in the absence of agreement between the interests concerned, and there is no evidence that renewed efforts on my part would lead to agreement.

Mr. PYBUS: Is it possible that the cause of this disagreement is that the Measure is of too comprehensive a nature, and would it not be possible to secure agreement on a Measure of a less ambitious character?

Mr. GRAHAM: That, certainly, was part of the case when we discussed this subject on the last occasion, but I am afraid that I cannot agree that a less comprehensive Measure would be sufficient for this purpose; and I am sorry to add that the interests concerned do not look like coming to an agreement even now.

Oral Answers to Questions — ARTHUR WHEELER AND COMPANY (INVESTIGATION).

Mr. WISE: 32.
asked the President of the Board of Trade whether he is yet in a position to make a statement concerning the investigation into the Wheeler companies and the steps proposed to be taken by the Board of Trade to protect the interests of individual investors?

Sir JAMES SEXTON: 33.
asked the President of the Board of Trade whether and when a report will be available on the affairs of the Wheeler companies?

Mr. W. GRAHAM: The investigations are proceeding, but it is not yet possible to make any statement in regard to the affairs either of Arthur Wheeler and Company or of the M.I.G. Trust, Limited.

Mr. A. M. SAMUEL: Will the right hon. Gentleman consider the advantage of having some representative of the Board of Trade present during this investigation, in order to ascertain where there are weaknesses in the Companies Act, so that the Board of Trade can introduce appropriate amendments of the law to prevent the repetition of these losses?

Mr. GRAHAM: That is a separate question, but I have already assured the House that we are in close touch with the investigations, and if the opportunity should arise and it is necessary to do so, I can, of course, get further information.

Mr. SAMUEL: As disasters under limited liability are happening so frequently will not the right hon. Gentleman study this case and consider early amendments of the company law by which they could be prevented?

Mr. GRAHAM: I have already replied in general, and without relation to this case, that there are proposed amendments of the Companies Acts; but the House must understand that pending the outcome of this investigation the Government can make no statement to the House.

Mr. WISE: May we assume that before the assets are distributed—and I understand that they are mostly in the hands of the banks—there will be an opportunity for the House to consider the report, and, if possible, to suggest action.

Mr. GRAHAM: No, obviously, I cannot make any promise to the House regarding the precise steps until I have the result of the investigation. I can only repeat what I said on the last occasion, that in that investigation the interests of all parties, including the class of investors the hon. Member has in mind, will be remembered.

Mr. WISE: I am not sure whether the right hon. Member understood my question. Will he see that the assets are not distributed until the report is available and the whole matter can be considered? I am anxious to avoid action being taken to prejudge that.

Mr. GRAHAM: The House must clearly understand that I am giving no promise this afternoon, but I will bear that point in mind.

Oral Answers to Questions — BRITISH ARMY.

VOCATIONAL TRAINING.

Mr. A. M. SAMUEL: 37.
asked the Financial Secretary to the War Office if
the vocational training centres at Chiseldon, Hounslow, and Aldershot can deal with all eligible men who wish for vocational training; and, if not, can facilities be increased?

The FINANCIAL SECRETARY to the WAR OFFICE (Mr. Sanders): At the present time, generally speaking, the numbers coming forward for vocational training are not in excess of the numbers for whom provision is made. Facilities have recently been provided for an additional 400 men a year and it is hoped that these vacancies will be filled during the current year. But my right hon. Friend the Secretary of State is, as the House is aware, keenly interested in this question, and the possibility of increasing the numbers who can take advantage of the scheme, and of any consequential increase in the facilities, is receiving careful examination and will be fully reviewed in connection with next year's Estimates. Any expansion of the scheme must, however, be gradual if the present high standard of success is to be maintained.

Mr. SAMUEL: If this vocational training is doing good to these men will the hon. Gentleman consider applying to the Treasury to get permission to obtain money from the unemployment grant already voted by this House?

Mr. SANDERS: I understand that the money voted for the Ministry of Labour for this particular purpose is required for the Ministry of Labour's own centres.

RECRUITING (REJECTONS).

Mr. CECIL WILSON: 35.
asked the Secretary of State for War whether he can give the numbers and percentage of rejections for physical reasons in the 10 most important centres for enlistment in each of the last five years?

The SECRETARY of STATE for WAR (Mr. T. Shaw): The term "centre" has been interpreted to mean "recruiting zone." I will, with my hon. Friend's permission, circulate in the OFFICIAL REPORT the figures relating to 10 larger representative zones.

Following are the figures:


STATEMENT showing the Number of Men served with Notice Papers during the last Five Recruiting Years in the undermentioned Recruiting Zones, and the Number Rejected for Physical or Medical Reasons, with Percentage.


Zone.
Number of men served with Notice Papers.
Numbers Rejected for Physical or Medical Reasons.
Percentage of Rejections.


Year ended 30th September
Year ended 30th September
Year ended 30th September


1926.
1927.
1928.
1929.
1930.
1926.
1927.
1928.
1929.
1930.
1926.
1927.
1928.
1929.
1930.


London
15,612
16,694
16,870
12,985
10,857
10,323
11,691
11,141
7,863
5,921
66.1
70.0
66.0
60.5
54.5


South Midland Zone, which includes Bristol and Birmingham.
7,467
7,927
6,729
5,593
5,342
4,018
4,497
3,572
2,618
2,499
53.8
56.7
53.1
46.8
46.7


West Lancashire Zone, which includes Liverpool.
4,897
4,048
5,253
4,537
4,895
3,381
2,504
3,279
3,052
3,373
69.0
61.8
62.4
67.3
69.0


Glasgow
3,810
3,498
3,037
2,328
2,077
3,331
2,863
1,752
1,242
1,087
87.4
81.8
57.7
53.3
52.3


East Lancashire Zone, which includes Preston and Manchester.
6,190
6,932
8,589
7,388
7,298
4,147
5,241
6,077
5,080
5,170
67.0
75.6
70.7
68.8
70.8


Welsh Zone, which includes Cardiff.
4,091
3,519
4,037
4,235
4,015
1,786
1,283
1,509
1,686
1,648
43.6
36.5
37.4
39.8
41.0


West Riding Zone, which includes Leeds, Sheffield and Hull.
7,737
7,749
9,096
7,810
6,798
5,141
5,378
6,109
4,825
3,981
66.4
69.4
67.2
61.8
58.5


South Eastern Zone, which includes Maidstone and Chatham.
3,746
3,384
3,091
2,801
2,309
2,022
1,605
1,364
1,132
912
54.0
47.4
44.1
40.4
39.5


Northumbrian Zone, which includes Newcastle and Middles brough.
5,454
5,350
6,272
5,325
4,596
2,354
2,469
3,021
2,738
2,317
43.2
46.1
48.2
51.4
50.4


North Midland Zone, which includes Nottingham.
2,252
1,659
1,473
1,535
1,668
919
732
378
176
209
40.8
44.1
25.7
11.5
12.5

Mr. WILSON: 36.
asked the Secretary of State for War whether he can give the percentage of rejections for physical reasons for the five years prior to the War and for the last five years?

Mr. SHAW: I will, with my hon. Friend's permission, circulate in the OFFICIAL REPORT the figures showing the percentage of rejections on physical and medical grounds in the recruiting years 1909–1913 and in the last five recruiting years.

STATEMENT showing the number of men served with Notice Papers, the number rejected on physical or medical grounds with percentage for the undermentioned periods.


Ended 30th September.
Number of men served with Notice Papers.
Number rejected for physical or medical reasons.
Percentage.


Five Recruiting years prior to 1914.


1909
…
…
…
75,630
35,364
46.7


1910
…
…
…
63,751
31,056
48.7


1911
…
…
…
65,724
29,321
44.6


1912
…
…
…
57,681
20,577
35.6


1913
…
…
…
46,133
12,277
26.6


Last five Recruiting Years.


1926
…
…
…
83,092
48,800
58.7


1927
…
…
…
83,814
50,396
60.1


1928
…
…
…
82,938
47,552
57.3


1929
…
…
…
72,268
39,359
54.4


1930
…
…
…
66,717
35,425
53.1

LOSS OF AIRSHIP R.101 (INQUIRY).

Commander OLIVER LOCKER-LAMPSON: 45.
asked the Prime Minister whether he will grant a debate for the discussion of the report on the R.101 inquiry at an early date?

The PRIME MINISTER (Mr. Ramsay MacDonald): If there is a general desire for such a debate it can take place on the appropriate Vote.

Commander LOCKER-LAMPSON: Before the country is committed to any policy in relation to airships, I hope we may have a long discussion on this subject.

The PRIME MINISTER: Yes, my answer provides for a whole day.

Lieut.-Commander KENWORTHY: May I ask the Prime Minister: Is it intended to announce the Government's policy in regard to airships when it is arrived at?

Mr. CAMPBELL: Can the right hon. Gentleman say whether the percentage of rejections is lower or greater since the War?

Mr. SHAW: I should like the hon. Member to look at the figures, but, speaking from memory, I should say that the percentage is higher since the War.

Lieut.-Colonel ACLAND-TROYTE: Is not the standard much higher than before the War?

Following are the figures:

The PRIME MINISTER: Certainly.

Mr. WELLS: Will the Prime Minister see that no decision is come to before a discussion takes place on future policy in regard to airships?

The PRIME MINISTER: A decision will be come to before the debate; otherwise, the House would debate nothing at all. The decision will be announced in the House when it is come to.

Sir W. BRASS: Has the right hon. Gentleman considered how much it costs to maintain the R.100 at the present time?

The PRIME MINISTER: I am afraid that I have not gone into that matter, but the whole question is being examined.

SUR-TAX (UNDIVIDED PROFITS).

Sir WALTER PRESTON: 40.
asked the Chancellor of the Exchequer whether the
82 bona fide commercial private companies who were assessed as regards their undivided profits for Sur-tax by the Inland Revenue, and who did not appeal against this assessment, have paid 7s. in the £ Sur-tax on all their undivided profits; and whether the 34 companies who appealed, and subsequently withdrew their appeal, also paid 7s. in the £ on the whole of their undivided profits, or was some arrangement come to with the Inland Revenue Department?

The FINANCIAL SECRETARY to the TREASURY (Mr. Pethick-Lawrence): Sur-tax was not paid on the undivided profits of the companies referred to at a rate of 7s. in the £. In each case the income for the particular period concerned was deemed to be the income of the members of the company and apportioned among them on the basis of their respective interests in the company. Surtax was charged in the case only of those members whose total incomes, including the amount of the company's income apportioned to them, rendered them liable to Sur-tax and then by reference to the graduated rates appropriate to their respective total incomes.

Sir W. PRESTON: Are these companies penalised because they were conservative in finance or because they were trying to evade payment of Sur-tax?

Sir W. PRESTON: 47.
asked the Chancellor of the Exchequer, in view of the desirability of private companies engaged in manufacture conserving their assets and not unduly dividing their profits in order that they may be in a position to provide up-to-date machinery and plant, can he state how much the Inland Revenue allow as a reasonable amount for a manufacturing company to put to reserve; and what percentage of the profits must be divided so as to secure immunity from assessment for Sur-tax on undivided profits?

Mr. PETHICK-LAWRENCE: The question whether or not there has been a reasonable distribution of income in a particular case is one which can only be determined by reference to the facts and circumstances of that case. A percentage of income which would constitute a reasonable distribution in the circumstances of one case might be quite unreasonable in the circumstances of
another, and no formula of general application could possibly be devised.

Sir W. PRESTON: Is the hon. Gentleman aware that many private companies are distributing far more of their profits in dividends than is considered safe because of this unknown and uncertain factor?

Mr. LOUIS SMITH: In the case of a highly technical industry will the hon. Member obtain the services of somebody who will be able to advise as to how much it will be safe to place in reserve?

Mr. PETHICK-LAWRENCE: That is a matter of detail which does not in the least vitiate the substance of the answer which I have given.

LOTTERIES AND SWEEPSTAKES.

Colonel HOWARD-BURY: 48.
asked the Chancellor of the Exchequer whether, seeing that Section 1 of the Revenue Act of 1898 only prohibits any advertisement or other notice of, or relating to the drawing of, any lottery which, in the opinion of the Commissioners of Customs, is imported for the purpose of publication in the United Kingdom, he can say by what authority a sweepstake ticket lawfully purchased by a Dominion citizen is confiscated or intercepted by the customs?

Mr. PETHICK-LAWRENCE: I presume that the hon. and gallant Member is referring to Irish Hospital Sweepstake tickets. I am advised that such tickets are lottery advertisements or notices within the meaning of Section 1 of the Revenue Act, 1898, and are liable on importation to seizure under the provisions of that Section.

Colonel HOWARD-BURY: Is the hon. Member aware that this Act only prohibits these imports for the purpose of publication in the United Kingdom, and in the case of personal possessions brought over by a Dominion citizen is it not perfectly legal for him to have them in his possession.

Mr. PETHICK-LAWRENCE: It depends on the circumstances, but I am advised in the sense in which I have already answered.

Colonel HOWARD-BURY: Is the hon. Gentleman aware that it is not for the purpose of publication, and therefore it is not illegal and this action is really bluff?

Mr. PETHICK-LAWRENCE: I have answered that question.

Colonel HOWARD-BURY: 49.
asked the Chancellor of the Exchequer whether he is aware that at Holyhead the luggage of passengers arriving horn the Irish Free State, including their private papers, is being ransacked in search of sweepstake tickets, their cheque books are opened and examined, the usual questions as to the possession of other dutiable articles in some cases being omitted; whether he is aware that, in the event of a passenger protesting, he is required to unpack his luggage and display all the contents on the platform; by what statutory authority the customs officers demand information as to articles which are not contraband; and whether he will give instructions to insure that Dominion visitors arriving in England shall not be subjected to such treatment?

Mr. PETHICK-LAWRENCE: Passengers from the Irish Free State are questioned by the Customs Officers at Holyhead in the ordinary course of their duties as to the possession of any dutiable articles or any prohibited articles such as sweepstake tickets, and in the course of examining the baggage of passengers the officers may require envelopes or packages containing papers to be opened. The production of cheque books, however, is not demanded nor is the usual question as to dutiable articles omitted. I have no reason to believe that the officers carry out their difficult duties otherwise than with proper courtesy and discretion. Sweepstake tickets imported into this country in contravention of the provisions of Section 1 of the Revenue Act, 1898, are contraband, and I see no necessity to issue any special instructions to the customs officers as suggested in the concluding part of the question.

Colonel HOWARD-BURY: Is the hon. Member not aware that it has already happened that the counterfoils of cheque books of Dominion visitors coming to this country have been examined, and will he take steps to prevent such an indignity happening to Dominion visitors in the future?

Mr. PETHICK-LAWRENCE: If the hon. and gallant Gentleman has any case of improper action on the part of the customs officers, I shall he only too glad to examine it.

Colonel HOWARD-BURY: In view of the unsatisfactory answer, I beg to give notice that I shall raise this matter on the Motion of the Adjournment of the House.

Mr. R. MORRISON: 52.
asked the Secretary of State for the Home Department, whether he is aware that agents acting on behalf of a Danish lottery are selling by post large numbers of lottery tickets in Great Britain; and what action he proposes to take?

The UNDER-SECRETARY of STATE for the HOME DEPARTMENT (Mr. Short): All that is practicable is done to prevent the use of the post for conveying circulars relating to such schemes, for instance by stopping them when they are observed in course of transmission.

ROYAL MINT (EMPIRE DAY MEDALS).

Sir WILLIAM DAVISON: 50.
asked the Chancellor of the Exchequer whether His Majesty's Government forbade the Royal Mint to strike Empire Day medals for the British Empire Union for distribution to children on Empire Day solely for financial reasons urged by the Mint; if so, will he inform the House why the British Empire Union, who have employed the Mint to manufacture these medals for the last three years, were not informed of these reasons; and whether there is any change of policy whereby the Royal Mint is now forbidden by the Government to execute orders for private individuals and for foreign governments?

Mr. PETHICK-LAWRENCE: The answers to the first and last parts of the question are in the negative. In view of questions which have been raised from time to time in Parliament and elsewhere about these medals, the Government considered that execution of the order might more appropriately be left to a private contractor.

Sir W. DAVISON: Will the hon. Gentleman kindly answer the question on the Paper, as to why the British Empire
Union, who have given orders for about 75,000 medals in the last three years, at what the Mint said was a satisfactory profit, the union paying for the dies, were not informed that the arrangement was no longer satisfactory?

Mr. PETHICK-LAWRENCE: I have answered that question. I should have thought that it was clear to Members of the House, and that it would be generally agreed, that it is not desirable that public Departments should be associated with bodies whose record shows strong political leanings.

HON. MEMBERS: Empire!

FILMS (CENSORSHIP).

Sir GEORGE PENNY: 51.
asked the Home Secretary whether steps have been taken to secure a more continuous contact between local authorities and the board of film censors to prevent the exhibition of films of doubtful character and tone; and whether the Government will see if it is possible to pay special attention in this respect as regards films exhibited on Sundays?

Mr. SHORT: Some steps have already been taken, but it has not yet been found possible to reach any decision. The question whether any special arrangement could be made as regards films exhibited on Sundays will receive consideration.

Mr. R. A. TAYLOR: Would censorship by local authorities of films exhibited on Sundays be permissible under the terms of the Sunday Performances (Regulation) Bill; and would the local authorities be able to impose it as a condition under the existing terms of the Bill?

Mr. SHORT: The power already rests to some extent with the local authorities. If my hon. Friend will look at the reply given by my right hon. Friend on the 11th December, he will see exactly the powers of the local authorities in relation to the censorship of films.

Mr. DAY: Is it not the fact that no films can be shown unless they have a certificate from the British Board of Film Censors, unless, of course, they are passed by the local council?

Mr. SHORT: I believe that that is so.

Oral Answers to Questions — ROYAL NAVY.

LOWER DECK COMMITTEES.

Mr. HORE-BELISHA: 53.
asked the First Lord of the Admiralty if he will arrange, when committees are called to deal with matters relating to the lower deck, that sufficient notice be given to lower-deck ratings to attend them?

The CIVIL LORD of the ADMIRALTY (Mr. G. H. Hall): So far as I am aware this is already done.

ROYAL DOCKYARDS (PRIVATE SHIP REPAIRS).

Mr. HORE-BELISHA: 54.
asked the First Lord of the Admiralty whether he is aware that a request was recently made that the steamship "Benmohr" be docked for repairs in His Majesty's dockyard, Devonport, and that it was refused, although the ship draws too much water to enter the Great Western Railway Company's dock in Plymouth; that on account of this refusal the steamship "Benmohr" had to go to Falmouth, thus losing the work for Devon-port and Plymouth; and whether, in the interests of employment in Devon-port and Plymouth, the Admiralty will see their way to revise their present policy with regard to the docking and repair of private vessels in His Majesty's dockyards?

Mr. G. H. HALL: The hon. Member is aware that it is the policy of the Admiralty that His Majesty's dockyards do not compete with private yards for private work, and in any case a dry dock would not have been available at the time desired for the "Benmohr."

Mr. HORE-BELISHA: Is the hon. Gentleman aware that this is not a question of competition If a wreck occurs outside Plymouth Harbour, why should not every facility be given to repair the ship?

Mr. HALL: Facilities are given for meeting emergencies, but I do not think that this can be described as an emergency.

Oral Answers to Questions — SUEZ CANAL.

Lieut.-Commander KENWORTHY: asked the Secretary of State for Foreign Affairs what general instructions are
given to the official directors on the board of the Suez Canal Company with reference to the safeguarding of British interests?

Mr. WISE: 58.
asked the Secretary of State for Foreign Affairs whether any instructions to guide their action on the board are given to the British Government nominated directors of the Suez Canal Company, either generally or on particular items of business, and, if so, what is the nature of such general instructions; whether any such instructions have been given recently in connection with the rates of toll, and, if so, what instructions; whether any reports are rendered to the Government by the directors concerned, and, if so, how often; and whether any such reports made in the last 12 months can be rendered available for the information of Members of the House?

Mr. DALTON: The official directors are instructed to report to the Foreign Office on all subjects arising out of the administration of the Canal which may be of interest to the various Departments of His Majesty's Government, and are informed of the wishes of His Majesty's Government in regard to specific issues as they arise. No instructions have recently been issued on the subject of the dues charged by the company, because the question of the attitude to be adopted by His Majesty's Government is still under consideration. Reports are submitted at fixed intervals on certain specific subjects; other questions are fully reported on as they arise. Detailed information regarding the operations of the company is submitted annually by the directors, and is issued as a Stationery Office publication.

Lieut.-Commander KENWORTHY: While thanking my hon. Friend for his answer, may I ask him whether the official directors have reported the question of dues to His Majesty's Government?

Mr. DALTON: The whole question of the dues is being considered by the competent Department of His Majesty's Government?

Mr. HORE-BELISHA: Are the Government considering taking over the adminis-
tration of the Canal, in view of the fact that the British shareholders, including the Government, are in the majority?

Mr. DALTON: I do not think that that is so. I do not think the facts are in accordance with the hon. Member's view.

Mr. WISE: Have the British Government ever issued any general instructions on the policy to be pursued by their directors on the board in relation to the general level of dues?

Mr. DALTON: That would be, not general, but a particular, instruction.

Mr. WISE: Then may I ask if any particular instruction on that point has been issued?

Mr. DALTON: No, Sir. I repeat that the particular problem of the dues is at present under consideration by the competent Department of the Government, and, until the Government have made up their mind—[Interruption].

Mr. PYBUS: Can the hon. Gentleman say which is the appropriate Government Department?

Mr. WISE: Are we to assume that, on the matter which is of most importance to British shipping interests, that is to say, the dues, neither this Government nor any other Government has ever made up its mind?

Mr. DALTON: Obviously, I cannot speak for previous Governments, but the present Government are now engaged in considering the matter.

Mr. PYBUS: Will the hon. Gentleman say which is the competent Department of the Government?

Mr. DALTON: All Departments are competent in the general sense. In the sense in which I have answered these questions, the Board of Trade and the Treasury are primarily concerned.

Mr. CAMPBELL: 56.
asked the Secretary of State for Foreign Affairs if he will ascertain from the British Government's representatives on the board of the Suez Canal Company whether they were present on 23rd April when a deputation representing all sections of British commerce requested the London committee of the Suez Canal board to consider a reduction of canal dues; and
whether the Government directors supported the application on behalf of British commerce?

Mr. DALTON: The deputation referred to by the hon. Member was received, not by the London committee of the Suez Canal Company, but by Lord Inchcape personally. No other director of the company was present. The second part of the question therefore does not arise.

Mr. CAMPBELL: Is it not a fact that, if the other directors had taken any interest in the matter, they would have been present? Was it not their duty to be present?

Oral Answers to Questions — POOR LAW INSTITUTIONS, NORTHAMPTONSHIRE.

Major EDMONDSON: 59.
asked the Minister of Health whether, having regard to resolutions passed at a public meeting held in Brackley, Northamptonshire, on 31st March last, protesting against proposals of the Northamptonshire County Council to close Poor Law institution in South Northamptonshire, he proposes to take any further steps to ascertain whether the scheme prepared by the county council is necessary or justified; and whether it is approved by the inhabitants and ratepayers of the district?

Miss LAWRENCE: My right hon. Friend has been in communication with the county council on the subject of the protests received. He will give due weight to the merits of the protests before coming to a decision, and he does not think that further information of the kind suggested is necessary.

Oral Answers to Questions — INSURANCE AND PENSIONS LEGISLATION.

Mr. HORE-BELISHA: 63.
asked the Minister of Health if he can now state when the inquiry into the existing insurance and pensions legislation will be completed?

Miss LAWRENCE: My right hon. Friend is afraid he cannot add anything to the reply which he gave to the right on. Member for West Woolwich (Sir K. Wood) on the 29th January, with regard to the work of the Cabinet Committee.

Mr. HORE-BELISHA: May I ask if this is a continuing inquiry, and if some limit could not be imposed on the time taken up by these discussions?

Miss LAWRENCE: I am afraid I cannot add anything to the answer that I have already given.

Sir K. WOOD: Is it not a fact that the inquiry has been completed, but that the Government do not like to say what has happened?

Miss LAWRENCE: I must refer the right hon. Gentleman to the answer given to him on the 29th January.

Oral Answers to Questions — CARPET INDUSTRY (WAGES).

Rear-Admiral BEAMISH (for Mr. WARDLAW-MILNE): 38.
asked the Minister of Labour what are the rates of wages in the carpet factories of Czechoslovakia; and how do these compare with the average of the wages for similar work in force in this country?

The MINISTER of LABOUR (Miss Bondfield): As regards Czechoslovakia, have no later information that that obtained by the International Labour Office in 1929, which was forwarded to the hon. Member. With regard to Great Britain, I have no recent information as to the earnings of comparable classes of work-people in the carpet industry, most of whom are paid on a piece-work basis. In these circumstances I am unable to make the comparison desired.

Rear-Admiral BEAMISH: If the House desires to get that information could not the right hon. Lady actually get it?

Miss BONDFIELD: I have given all the information I can. It is a question whether it is available in the country concerned.

Captain WATERHOUSE: Have we not Consuls in these countries, and is it not their most important function to collect information?

Miss BONDFIELD: They can hardly collect it unless it is compiled.

Oral Answers to Questions — UGANDA (FISHERY COMMISSION).

Captain P. MACDONALD: 64.
asked the Under-Secretary of State for the
Colonies what concessions have been granted by the Government of Uganda to exploit the fisheries on the Victoria Nile between Ripon Falls and Foweira, and on the adjoining swamps and tributaries, including Lake Kioga; and what consideration has been given for any concessions?

The UNDER-SECRETARY of STATE for the COLONIES (Dr. Drummond Shiels): An agreement has been executed under which, subject to certain conditions relating to the provision of capital, a concession will be granted by the Government of Uganda for the exploitation of the fisheries in the area mentioned by the hon. and gallant Member. The concession will be worked by a company to be formed for the purpose, and the Protectorate Government will receive a royalty at the rate of 5 per cent. of the net profits earned by the company during the first three years, 7½ per cent. during the fourth and fifth years and 10 per cent. after the fifth year. The concession will run in the first instance for 25 years, the Government retaining the right to terminate it at the expiration of three years if the concessionaries have not commenced production and have failed to expend £10,000 on the provision of the necessary plant and works, and at any time after three years if the concession is not being satisfactorily developed. Strict provision is made in the concession for the safeguarding of native fishing rights and for the conservation of fish.

Captain MACDONALD: Is the company a British company?

Dr. SHIELS: Yes, Sir.

Oral Answers to Questions — EMPLOYMENT EXCHANGE, MACCLESFIELD.

Mr. REMER: 65.
asked the First Commissioner of Works if he can make any statement as to when the new Employment Exchange at Macclesfield will be completed; and if, in view of the exposed position and absence of shelter at the existing Exchange, he will take steps to see that the new Exchange is ready for occupation by the early autumn?

The FIRST COMMISSIONER of WORKS (Mr. Lansbury): A tender has been accepted for the erection of a new
Employment Exchange and it is hoped that the new building will be ready for occupation early next year. It will not be possible to complete the building by the autumn.

Mr. REMER: Will the right hon. Gentleman make the same provision during the coming winter as existed last winter?

Mr. LANSBURY: The new Exchange will certainly be everything that, the hon. Member expects.

Mr. REMER: The trouble is going to take place in October and November. Will the right hon. Gentleman take steps to deal with the situation at that moment?

Mr. LANSBURY: We will do our best.

Oral Answers to Questions — LAND VALUES (TAXATION).

Mr. CHAMBERLAIN (by Private Notice): asked the Prime Minister what procedure he intends to follow in dealing with the Land Tax Resolution, and at what stage the Chancellor of the Exchequer will make the full statement of his proposals for the valuation and taxation of land?

The PRIME MINISTER: After the usual Budget Debate to-day and tomorrow on the outstanding Resolution for Amendment of the law, the Government propose to ask the House on Thursday to pass a Special Resolution, the terms of which appear on the Order Paper this morning. If that Resolution is passed by the House, my right hon. Friend should on Monday move in Committee of Ways and Means a Resolution authorising the imposition of a tax on Land Values, and that will be the occasion for a full statement of his proposals. Should time permit on Thursday, the Second Reading of the Palestine and East Africa Loans Bill, and other Orders will be taken on that day.

Sir AUSTEN CHAMBERLAIN: If the Resolution on Thursday is carried, will the Resolution that the Chancellor of the Exchequer proposes to move on Monday appear on the Paper on Friday?

The PRIME MINISTER: On Friday morning. It will be handed in on Thursday.

Oral Answers to Questions — PROBATION OF OFFENDERS (SCOTLAND) BILL.

Reported, with Amendments, from the Standing Committee on Scottish Bills.

Report to lie upon the Table, and to be printed.

Minutes of Proceedings to be printed.

Bill, as amended (in the Standing Committee), to be considered upon Thursday, 7th May, and to be printed. [Bill 132.]

MESSAGE FROM THE LORDS.

That they have agreed to,—

Amendment to—

Yarmouth Naval Hospital Bill [Lords], without Amendment.

CRIMINAL JUSTICE (AMENDMENT) BILL,

"to amend the table of court fees to be taken by clerks to justices of the peace," presented by Sir Henry Cautley; supported by Sir John Withers, Mr. Galbraith, Mr. Meller, Sir Walter GreavesLord, Mr. Marjoribanks, and Earl Castle Stewart; to be read a Second time upon Monday next, and to be printed. [Bill 133.]

SELECTION (STANDING COMMITTEES).

STANDING COMMITTEE C.

Mr. William Nicholson reported from the Committee of Selection; That they had discharged the following Members from Standing Committee C (added in respect of the British Museum and National Gallery (Overseas Loans) Bill [Lords]): Mr. Benson and Mr. Markham and had appointed in substitution: Mr. David Grenfell and Mr. Morgan Jones.

Report to lie upon the Table.

PRIVATE BILLS (GROUP E).

Sir John Ganzoni reported from the Committee on Group E of Private Bills; That Mr. Muggeridge, one of the Members of the said Committee, was not present during the sitting of the Committee this day.

Ordered,
That Mr. Muggeridge do attend the Committee To-morrow, at Eleven of the clock.

Orders of the Day — WAYS AND MEANS.

Considered in Committee. [Progress, 27th April.]

[Mr. DUNNICO in the Chair.]

AMENDMENT OF LAW.

Question again proposed.
That it is expedient to amend the Law relating to the National Debt, Customs, and Inland Revenue (including Excise), and to make further provision in connection with Finance."—[Mr. P. Snowden.]

Mr. CHAMBERLAIN: Now that sufficient time has elapsed to enable us to gather up general impressions and reactions to the statement to which we listened yesterday, we are in a better position to discuss it than we could have been immediately after the Chancellor of the Exchequer had sat down. I shall not incorrectly sum up the position when I say that the dominant feeling inspired by reflection is one of relief. It is true that the Independent Labour Party are thoroughly dissatisfied. I dare say that they have once again been reduced to utter despair. But then who cares about the Independent Labour Party? So long as they continue to vote with the Government, they will neither get sympathy from this side nor consideration from that. The Free Traders have been relieved, because the Chancellor has indicated that once again his virtue will withstand all attempts upon it and all temptations to dally with a Revenue tariff. The owners of land are relieved, because, while they knew beforehand that some mischief was afoot, they have now discovered that Land Taxes will not, at any rate, become operative for another two years; and many things may happen in two years; many schemes may "gang agley." Drinkers and smokers are relieved, because the luxuries which mean so much to them are going to cost them no more. And, finally, traders, manufacturers, commercial and industrial men are relieved, because, although the Budget does nothing to help them, at any rate, it does not add further to their present imposts.
The sense of relief to which I have alluded is enhanced by the fact that probably few, if any, Budgets in recent
years have been anticipated with so much anxiety as the one which was produced yesterday. From all the information that we could gather beforehand the prospects were indeed gloomy. We knew that last year there was a deficit of £23,000,000. We knew that there was an excess on Civil Supply Services of £9,000,000 over the expenditure of last year. Although the deficiency in the amount available from the Rating Relief Suspense Account was cancelled out by the extra to be anticipated from the yield of the new taxes imposed last year, yet it was generally anticipated that the Inland Revenue would have to be estimated at something substantially less than last year, and, putting these items together, it appeared that the deficiency might well amount to £40,000,000 or £45,000,000. But there was something more than that. The people remembered the grave words of the Chancellor last year about financial honesty. They recollected how he said that he for one was not going to leave his successor to pay his bills, and, if he was not going to eat those words, then there was £5,000,000 and £23,000,000, together another £28,000,000, to be added to the deficiency, and the total, therefore, might easily come to something like £70,000,000 or more. The Chancellor himself had added to the anxiety by more than one grave and serious warning of the risk to the House and to the country. It is not many months since in this House he said:
I say, with all the seriousness I can command, that the national position is so grave that drastic and disagreeable measures will have to be taken if Budget equilibrium is to be maintained and if industrial progress is to be made.
He followed that up with an even more dismal statement that
It will involve some temporary sacrifices from all, and those best able to bear them will have to make the largest sacrifices. In the general sacrifice the Members of the Cabinet are prepared to make their substantial contribution."—[OFFICIAL REPORT, 11th February, 1931; cols. 447 and 449, Vol. 248.]
Surely, that at least was a threat so awful it might well have made the most ardent spendthrift upon the Liberal benches quake in his shoes. If we are to accept the views indicated in the Chancellor's statement yesterday, all this gloom and anxiety was totally unneces-
sary. No drastic measures have been taken after all to maintain the Budget equilibrium. No sacrifices, as far as we have been told at present, have been called for from Cabinet Ministers, and all we know is that some voluntary contributions are to be expected from the Law Officers of the Crown, who will, however, I trust, retain sufficient to enable them still to enjoy their hard-earned crusts. It would appear that no crisis is upon us, and apparently no crisis is to be expected unless anything should occur to disturb the present happy relations which exist between the Government and the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George).
The Chancellor, indeed, yesterday scornfully spoke of the Jeremiahs whose anticipations had been disappointed. Their anticipations have only been disappointed, because he has swallowed his own principles, and, while we shall not quarrel with him on that account, we cannot help smiling at the somewhat hasty descent from the pedestal of financial righteousness on which he took his stand last year. Pride goes before a fall, and we who protested last year against an exhibition of virtue which we knew to be hollow are content for the present with this demonstration of the correctness of our views. If that were all that one had to find fault with in the picture presented to us by the Chancellor there would be, after all, not much ground for criticism, but we have to reckon with what, I think, must be a personal peculiarity of the Chancellor. The spring time seems to have a seasonal effect upon him. Every year he has an outburst of optimism which apparently coincides with the vernal equinox, and, while at other times he is gloomy, when it comes near to the period of the Budget he sees everything through rosy spectacles.
Last year his Budget was coloured throughout with an optimism which subsequent events have proved to be totally unfounded. He over-estimated his revenue by no less than £13,500,000; he under-estimated his expenditure by upwards of £12,000,000, and the result was that a surplus estimated at £2,250,000 was turned into a deficit of £23,250,000. To-day, he puts this down to developments
in world conditions which could not have been foreseen. But I think even he would agree that his want of foresight last year must make it necessary for us to examine, with the greatest possible care, any forecasts which he makes to us on this occasion. It is not for the Chancellor to cry stinking fish, and I myself would be the last to try and paint the picture of the country's condition in darker colours than are warranted by the true facts. It is the duty of the Government to keep the people informed of the truth, and the Chancellor of the Exchequer on other occasions, when it was not spring time, has not hesitated to utter those grave and serious warnings to which I have already called attention. Speaking at Slaithwaite—[HON. MEMBERS: "Slathick!"] My pronunciation, at any rate, has enabled the majority of the House to recognise it. Speaking there, on the 21st February, he said:
The worst thing that any Government can do is to leave the country in ignorance of what its responsibilities are. If the position is serious, the country must be made to know it.
If one applies those words to what the Chancellor of the Exchequer told us yesterday, we have to ask whether he did, in fact, make the country acquainted with its responsibilities, and whether the country, reading his speech, would realise its true position. Take, first of all, the statement about the deficit of last year. He explained to us that, although it appears to amount to £23,250,000 on the wrong side, yet, if you look at it in another way, it really resolves itself into an actual surplus of £43,500,000. Is that telling the country what its responsibilities are? Is that making the country realise what is the true position? Re said yesterday that what he called the main feature of his Budget was one on which he was going to speak another time. But the main feature of the Budget was, in truth, omitted from his statement, and that feature is the relations between the Treasury and the Unemployment Insurance Fund. Last year the total contribution from the Exchequer to the Unemployment Insurance Fund, which appears in these accounts, was £37,000,000, but that was not the total liability of the country towards the fund. During last year £35,000,000 was loaned to that fund,
and if we deduct the £35,000,000 from the £43,500,000, there remains not a surplus of £43,500,000 but only of £8,500,000. Hon. Members opposite receive that statement in silence.

Mr. SANDHAM: Not at all. It is all produced by the workers.

Mr. CHAMBERLAIN: In the Treasury Memorandum which was submitted to and approved by the Chancellor of the Exchequer himself before it, was put before the Royal Commission on Unemployment Insurance, there appeared this statement:
This additional borrowing for purposes other than productive is now on a scale which, in substance, obliterates the effect of the Sinking Fund.
Why did we have no allusion to that statement, already approved by the Chancellor of the Exchequer, when the right hon. Gentleman suggested to us yesterday that last year we had a real surplus of £43,500,000? What about next year? In that same Memorandum it was estimated that the borrowing during the current year would amount to from £40,000,000 to £45,000,000. What does the Treasury Memorandum say about the future?
These vast Treasury loans are coming to represent, in effects State borrowings to relieve current State obligations at the expense of the future, and this is the ordinary and well recognised sign of an unbalanced Budget.
This is really the vital and serious part of the Budget, and before this Debate closes we are entitled to ask for and to receive from Members of the Government some more definite and precise information about the future and their relations with the Unemployment Insurance Fund than anything that was given to us yesterday. We want to know whether this borrowing is to continue through the current year—borrowing at the rate of £1,000,000 a week. If it does, then by next April the debt of the fund will have reached something between £100,000,000 and £150,000,000. That would be the sign of an unbalanced Budget. I can hardly believe that that is intended by the Government. The Chancellor of the Exchequer yesterday only once mentioned the Royal Commission, but at other times he is less reticent. At a dinner at the Mansion House, on the 15th October last year, he said:
I think it is the duty of Parliament to face up to this problem and to put the Insurance Fund on an insurance basis.
Is that still his view? When is Parliament going to face up to this question, and when is it going to put the fund on an insurance basis? By one ingenious device after another the report of the Royal Commission has been delayed and apparently is going to be delayed so long that it will probably be impossible to legislate upon its recommendations before next autumn. Then, what is going to happen? Suppose that then the Government ask Parliament to face up to realities, to face the situation and put the Insurance Fund upon an insurance basis. What then is going to happen? I refer once more to the words of the Chancellor of the Exchequer, on the 21st February, when he said:
Whatever the Royal Commission may recommend and whatever the Government may do, it is quite certain that in a very considerable measure the Exchequer will have to continue to bear the responsibility for the genuinely unemployed.
[HON. MEMBERS: "Hear, hear!"] Hon. Members opposite accept that. Where is the provision for that liability in the Budget? The Chancellor of the Exchequer cannot escape from this dilemma: either he is going to permit continued borrowing to an extent that will bring the debt of the Unemployment Insurance Fund within the terms of that Treasury Memorandum, or else he is going to put the fund on an insurance basis; he is going to take over liabilities towards the genuinely unemployed not provided for in the Insurance Fund, and for which he has made no provision in this Budget. I do not know whether we can take it that the economies which are expected from the report of the May Commission are to bear the cost of this new liability. What were the circumstances under which that Commission was appointed? It was not the Chancellor of the Exchequer's own idea. It was a suggestion which was made to him from the benches below the Gangway on this side of the House, and was not very graciously accepted at the time. The right hon. Gentleman said that, as they had appointed 72 committees already, perhaps one more would not make much difference. He said:
I have no objection at all to setting up such a committee, but I frankly tell the
House that I do not expect much from it, As a matter of fact, I believe that I could write its report to-morrow.
4.0 p.m.
Yet yesterday he came down to the House and said that he was confidently expecting from this committee such economies as would be sufficient to wipe out a large part of his deficit of £23,250,000. How are we to reconcile this indifference, this scepticism about the work of a committee only a few months ago, with the confident optimism to-day which seems to depend on it to meet all untouched liabilities? I think the Committee must see that the Budget makes a totally insufficient provision for the liabilities under the Unemployment Insurance Fund. That can only add to the discredit which already attaches to that fund, and it is one which is not likely to escape the attention of foreign observers, who have already fastened upon the fund and all its implications, all its demoralisation and degradation from the original purpose for which it was intended, as the Achilles heel of this country.
I want to pass to the actual proposals which were made to meet the deficit brought down by the Chancellor yesterday to something under £37,500,000. Before I come to the Actual details, I would like to remind the Committee of some words used by the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George) last year which seem to me pertinent to the situation. Speaking on the Budget in April last year, he said:
All taxation must be a tax upon industry.… But it is not the taxation that matters; it is the expenditure.… If we are committed to expenditure, there are only two ways of meeting it. The first is by paying it out of current revenue and the second is by borrowing, and the second is much more injurious."—[OFFICIAL REPORT, 16th April, 1930; col. 2939, Vol. 237.]
Taxation and the other expedients of which the Chancellor has made use are rendered necessary by the expenditure which has gone before. Before we come to consider whether he has met that expenditure in the best way, I think we must make our protest against the expenditure itself. If we look at the Table on page 10 of the Financial Statement, we see the scandalous fact that the Civil Votes under Supply Services show an increase
of upwards of £22,000,000 as compared with the Estimates of last year, and if we look at Table I on the second page we see that the Estimates of last year were themselves increased during the year by no less than £14,000,000 in Supplementary Estimates. In this Budget a paltry sum of £134,000 is carried forward to meet little accidents of that kind. We have no good reason to be sanguine that this year will prove any exception to the years which have preceded it, and that we are going to be freer this year from Supplementary Estimates and additional expenditure owing to the ambitions of the colleagues of the Chancellor of the Exchequer than we have in previous years. No, Sir, £134,000 is a gamble. It is a gamble which is not justified by anything which has happened in the past, and I venture to say that the events of the coming 12 months will prove that it is not justified in this case any more than before.
In dealing with the proposals of the Chancellor, I shall say very little about the proposed Land Taxes, first of all because they are not going to provide any revenue for this Budget, and, therefore, would be irrelevant to my purpose; and, secondly, because we do not yet know what the proposals of the Chancellor are. I observe that in the official organ of the party opposite, which frequently appears to have much better information than the Government think it desirable I to afford to the House, we are given some additional information beyond that which we were afforded yesterday. We are told that agricultural land is not to be subject to the Land Tax, unless it has some value greater than its value as agricultural land. Apparently, we are to wait until Monday before we can be told in this House whether that is an accurate forecast or not. We do not know yet, because the official organ has not told us, whether such other matters as allotments, playing fields and land reserved from building by town planning schemes is or is not to be subject to the tax, and, in the absence of any information upon such important tails as these, it, obviously, would be premature to enter into any discussion of what the Government may have in mind.
I may say, however, even at this stage, that I contemplate with a good deal of apprehension the setting up of new machinery for the purpose of land valua-
tion. It is undoubtedly going to be very costly. It is undoubtedly going to add very largely to the number of civil servants, already far too large. The results will probably be doubtful, if, indeed, the scheme ever comes to maturity, and one can only wonder that in troubled times like these, when the whole attention of the country should be focused upon an endeavour to improve conditions of trade and industry, the Government should once again wantonly and unnecessarily throw us into all the contention and the bitterness which certainly will revolve round these schemes. As to the proposals for providing revenue, whatever may be said, the Chancellor cannot be accused this year of being original. At some time or other all of us have seen and enjoyed those performances at music halls and revues where you see two artists dressed exactly alike, one standing a little at the back or one one side of the other—

Mr. MacLAREN: Rothermere and Beaverbrook.

Mr. CHAMBERLAIN: —performing exactly the same movements with their arms and legs, and the charm of the performance, of course, lies in the accuracy and precision with which one performer mimics and copies the other. Let me offer my compliments to the Chancellor upon the skill and the proficiency which he has achieved in playing his part in the imitation of my right hon. Friend. It is a satisfaction to all of us that he has kept the fixed debt charge at £355,000,000. When he wants some £37,000,000, the first thing he does is to see whether there is any hen-roost to be raided, and he has been fortunate enough to find one which had escaped the attention of my right hon. Friend. Once again, I am not going to quarrel with him on that account, but one cannot help wondering what he would have said about the honesty of the finance of a Conservative Minister who had taken £20,000,000 out of this exchange fund, part of the assets of the country, to devote to current expenditure.
If that is not enough, he goes again to the bible of my right hon. Friend to find a source for the next contribution towards the filling up of his gap. This time he advances the collection of Income Tax on Schedules B, D and E, as my right hon. Friend advanced it on
Schedule A. But there is a very big difference between those two transactions. They apply to a totally different class of people, and, whereas I do not think that anybody can say that the proposal which my flight hon. Friend carried through, with so valuable a result to the Treasury, inflicted any very serious hardship upon those who were made subject to it, it is very different when you come to the class of people who will be affected by the present proposals. It seems to me that here you have another example of what the Chancellor of the Exchequer is so fond of—class legislation—class legislation of the meanest possible character, because it affects those who, on the one hand, do not benefit by the reduced cost-of-living which affects the working classes—[An HON. MEMBER: "Rubbish!"]—not to the same extent—and, on the other hand, have not got votes enough to make their opposition formidable to the Chancellor.
Finally, we come to the last £7,500,000 from the tax on oil. I noticed that when the Chancellor approached this part of his task, he walked delicately. He said he had never liked the tax. He reminded us that petrol was very cheap to-day, and he said that he was justified, he thought, by the fact that there was a real emergency. I would like to read to the Committee what the Chancellor said in 1928 about the duty which was imposed by my right hon. Friend. He said:
The Chancellor tried to justify this Petrol Duty by pointing out that the price of petrol to-day is cheaper than it was a year or two years ago. Surely that is no reason why he should put a tax upon it and increase its price. He ought to have welcomed that decrease in the price of petrol as an aid to production and a stimulus to trade; instead, he has made the cost of the article dearer by this imposition… It is an unsound and an unjustifiable tax."—[OFFICIAL REPORT, 5th June, 1928; cols. 39–40, Vol. 218.]
I leave it at that. I would like to say one word upon the observation of the Chancellor that he could think of no Customs or Excise duty which would cause less hardship than his tax upon oil. I am afraid that the Chancellor of the Exchequer has hardly an open mind upon this subject. If he had he would have looked around and without any difficulty he would have found another article, which is also cheaper than it was a year or two ago—sugar.
If he had taken sugar and put a little impost upon imports of foreign sugar, he would, without appreciably increasing the price to the consumers in this country, have helped agriculture at home, put the sugar-growing Colonies in the West Indies and Mauritius again on their feet, and have added substantially to the revenue of the Exchequer.
I am not going to enter upon another discussion of the old question of Protection. The Chancellor of the Exchequer has missed a great opportunity. By putting a tax upon those things that come into this country which could be produced here he might, indeed, have done a great deal, not merely to help his revenue, but to give that stimulus to trade and confidence to industry which he himself has so frequently recognised as being the first essential to renewed prosperity. I believe that in present conditions—I am encouraged and fortified in this belief by the support of many bankers, many economists, and many life-long free traders—a tariff is equally necessary for revenue purposes and as a stimulus to our home industries. The passage which showed greater vehemence than any other in the speech of the Chancellor of the Exchequer was when he told us that as long as he holds his office he would never be a party to the imposition of a tariff. The reflection which came to me was that here is the last Chancellor of the Exchequer who will ever again introduce a Free Trade Budget in this House. The present Budget, with its sham optimism, with its evasions and postponements, with its makeshift expedients, is itself an overwhelming confession of the total inadequacy of Free Trade to meet modern requirements. The Chancellor of the Exchequer has described it as a landmark. It is truly a landmark, and it will remain a mark to show the end of an obsolete and worn-out system and the beginning of something more adaptable to the needs of modern industrial civilisation.

Sir DONALD MACLEAN: Let me at the outset join in the felicitations to the Chancellor of the Exchequer, not only upon the recovery of his health, but on the lucid and powerful way in which he expounded the difficulties of the nation and his proposals for meeting them. The right hon. Gentleman the Member for
Edgbaston (Mr. Chamberlain) at the conclusion of his remarks brought out what really is the sole argument of the Tory party for dealing with any financial situation, however grave it may be. They desire to get rid of Free Trade as an old-fashioned method of looking after the interests of the people of this country and for balancing the Budget. I was amazed at the assurance of the right hon. Member for Edgbaston. As a matter of fact, this is probably the only country in the world of any size and importance which balances its Budget. Take the United States of America, which is, I suppose, the greatest exponent of a scientific tariff system in the world. Their deficit, on the authority of the "Times," is to be nothing short of £150,000,000. If we are to choose between an old-fashioned system which has enabled us to balance our Budget in a year which has severely tried fiscal systems in all parts of the world and a system which in America has resulted in a deficit of £150,000,000, I stand by Free Trade.
The right hon. Member also referred to the large sum which this country has to spend in connection with unemployment, which, as we all know, is the spectre which stalks throughout the streets of our cities and in the countryside as well. If we look at Free Trade England and compare it with the United States of America, there are no bread lines here, and no system by which skilled artisans are invited to contribute something by which the children of the family can be fed at home by organised apple selling at street corners. Nothing could be more unfortunate for his case than the two points put forward by the right hon. Member for Edgbaston. The unemployment system in this country may be faulty in some respects, and this House will have to set, itself to reform it, very largely upon the lines indicated by the Government Actuary—at least that is my opinion—but if we are to compare policies, which is what the right hon. Gentleman for Edgbaston did, in regard to the balancing of the Budget and the position of unemployment in a Free Trade country and in a tariff country, then the advantages are overwhelmingly in favour of this country, with all its faults and difficulties. [An HON. MEMBER: "Which tariff country?"] Any tariff country. Take the pet example of France. They have 1,250,000 unemployed to-day, with
no unemployment system to cope with it. I repeat, the comparison with any tariff country is unfavourable in regard to finance and unemployment as against Free Trade England. I agree with the right hon. Gentleman the Member for Edgbaston that there was a large measure of relief throughout the country at the Budget statement of the Chancellor of the Exchequer, as well as in the city of London. It is an emergency Budget. There are devices, it is no use mincing words, to get over an emergency, and as long as they are devices to get over an emergency I join in the approval of the proposals of the Chancellor of the Exchequer.

Mr. CHURCHILL: You did not say that to me.

Sir D. MACLEAN: I prefer an emergency Budget to an emergency tariff. An emergency Budget is one which sooner or later does provide that the country shall face the facts, disagreeable as they may be. The emergency tariff suggested by the right hon. Member for Edgbaston would lay broad and deep the foundations of a system of high Protection which is repudiated by the experience of the world. I welcome the Budget as a whole. We may have to express some criticisms later, but I hope that we shall be able to get modifications as and when we deem them to be necessary, but in regard to the maintenance of Free Trade and on the question of economy, the committee on which was suggested by hon. Members on these benches, and on the proposals in regard to land values, we are in hearty support of the Chancellor of the Exchequer.
Let me say one word about the Committee on Economy. The right hon. Member for Edgbaston, not unjustifiably, twitted the Chancellor of the Exchequer with the lukewarm reception given to the suggestion when it came from these benches, but I was quite unaware at that time that there was so much hearty support for the proposal from the benches above the Gangway. I wish they had said something to that effect at that time. As a matter of fact, both Front Benches were lukewarm and slightly critical of the proposal when it was put forward by the Liberal party. It is not the first time that the Liberal party has taught both the other parties in this House on the
question of economy and the practical way of solving some of our problems.

Sir KINGSLEY WOOD: Had you not better wait for results?

Sir D. MACLEAN: I am waiting for results; and I hope that the right hon. Member for West Woolwich (Sir K. Wood) will join in the felicitations when they are due. There will be no credit to him at any rate. I entirely agree with the right hon. Gentleman for Edgbaston that the success of the Budget depends completely upon the control by this House and the Chancellor of the Exchequer of expenditure during the current year, particularly with regard to Supplementary Estimates. The estimated surplus is a purely nominal one of £134,000. Let me remind the Committee of what has happened in years past. Every Chancellor of the Exchequer has set out on his voyage for the next financial year with the best expectations. In 1926 the total Supplementary Estimates were £11,739,000, including, of course, exceptional sums in connection with the general strike. In 1927 they were £5,788,000; in 1928 they were £3,494,000; and in 1929 they went up again to £14,146,000, including the large extra payments in connection with unemployment benefit. In 1930 they came up to £14,400,000. In each of those years there were savings credited from Departments other than the ones which produced the Supplementary Estimates, and they reduced the total in same years by £4,000,000 or £5,000,000 a year.
But these figures still leave the Committee face to face with the fact that under the best conditions, under the present system, there is not much likelihood of our having to pay much less than £7,000,000 to £8,000,000 in Supplementary Estimates each year. There is one way, perhaps, of avoiding that, and that is that before the Supplementary Estimates are suggested or laid before a Committee of this House, there should be instilled in the hearts and minds of every Department the fear that not only the Committee, but this House, will exercise its control and determination to avoid any expenditure which it is possible to avoid. Once a Supplementary Estimate comes here it is pretty well all over. It is the same with every Government. Therefore, the only way in which real control can
be exercised is that Supplementary Estimates which might even now be in the minds of some of the Departments shall never reach this House. [HON. MEMBERS: "Will you vote against them?"] I shall see. I shall be quite frank about that. I shall exercise in the future, as in the past, what effort I can to assist public economy inside and outside the House.
Let me call attention once more to the seriousness of the financial position. If we take the year 1923–24 with the all-in expenditure, it did not exceed £789,000,000. Taking the all-in expenditure, that is self-balancing Departments such as the Post Office and the Road Fund, the Chancellor of the Exchequer's figures show that the sum to-day is not less than £889,000,000. There is another factor to which I must call attention. There have been certain automatic savings effected. First of all, there has been a saving of round about £13,000,000 in the reduction of the service in connection with Debt. Then there is a saving of about £20,000,000 in connection with War pensions, and another saving of about £5,000,000 owing to the wind-up of certain Departments connected with the War. There is another very significant figure, and that is a saving of about £20,000,000 caused by the fall in wholesale prices. I calculate that if you take those figures together you have £58,000,000 of automatic savings, and to ascertain the real expenditure those automatic savings to-day should be taken into account.

Mr. CHURCHILL: There are certain automatic increases.

Sir D. MACLEAN: There are certain automatic increases under Statute; I know.

Mr. CHURCHILL: They exceed the automatic savings.

Sir D. MACLEAN: That is a perfectly relevant thing for my right hon. Friend to say. There are automatic increases by Statute and my right hon. Friend says that they exceed the savings. I do not accept that view, but the figure I have given must be subject to that sum. The position is sufficiently terrifying to give this Committee pause in its outlook on the financial position. Hon. Friends of mine associated with the Independent Labour Party have issued a manifesto, in
which they state their belief that this country is to be saved not only by saving money but by the further spending of money. Happily, that point of view is not held by the Government of the day, and certainly is not held by the vast majority in this House. Mr. Gladstone wrote to Mr. Cobden in 1860, when the Budget totalled £70,000,000, that it was more difficult to save a shilling than to spend £1,000,000. I give that crumb of comfort to the Chancellor of the Exchequer.
I hope that in connection with this Budget the whole House, regardless of party, will realise that the country looks to us to effect all the economies that are possible, with the full determination to see that in the next financial year large savings can and must be effected. I am not aware, looking back on the history of the past few years, that the Conservatives distinguished themselves by anything other than extravagance, which aroused not only the opposition of other Members of the House, bat of almost every representative newspaper in the country. It is very much better to drop party bickerings on this great national subject, and to have a much more serious mind about it.
With regard to the Income Tax proposals of the Chancellor, the right hon. Member for Edgbaston rightly said that as from 1st January next the Income Tax payer will have to pay three quarters of a year's tax instead of half a year's. I do not think that the Income Tax payer will be other than relieved by the knowledge that that is the only difficulty which he has to face in the current financial year; he will be thankful that there is no change in the rate of tax, and I am sure he will do his utmost to comply with the reasonable request of the Chancellor of the Exchequer. There are several points in connection with Income Tax, notably the question of the collection, about which I must say this: We are determined to do everything that lies in our power to keep intact the position of the local assessors and local commissioners. In our view, that is a most important matter. As long as that is adequately safeguarded, we are prepared to consider the proposals of the Chancellor of the Exchequer with regard to collectors, purely on the ground of efficiency.

Sir K. WOOD: Does that statement apply to local collectors as well?

Sir D. MACLEAN: I was endeavouring to distinguish between collectors and the local commissioners. The argument that has been put forward on that matter is that this proposal is only a side-way of getting at the local commissioners. That is the argument which is constantly used in the daily Press, and I read it there this morning. The Liberal party welcomes that part of the Budget which Ideals with the taxation of land values. It is a proposal which has been far too long delayed. My right hon. Friend the Member for Carnarvon Boroughs (Mr. Lloyd George) will no doubt deal with a later. Great and overwhelming has been the injustice for many years past. Every thousand pounds that the country spends now on public improvements adds to the necessity of carrying through this much-needed reform.

Colonel WEDGWOOD: After 23 years I have discovered a Budget which displays a glimmering of intelligence, and I am indeed glad to have this opportunity of congratulating the Chancellor of the Exchequer for doing something which in the long run must be of definite and permanent advantage to employment in this country. I see that the hon. and gallant Member for Rye (Sir G. Court-hope), in an interview with a correspondent of the "Times," states:
There is no doubt that the threat of land values taxation, however small its eventual incidence may prove to be on certain classes of land, will have a depressing effect on market prices.
That is precisely what I hoped. It is not the actual incidence of the tax or the amount of the tax, but the fact that for the first time there is a chance of levying an annual impost on the value of land which is not being put to the best use at the present time. That annual tax will act as a perpetual incentive to the owners of such land to allow people to use that land on cheaper terms than they can obtain at present. It will reduce the height of the barrier or fence which has hitherto ringed round the land of this country and enable the man who wants to use land, whether it be for allotments, or smallholdings, or business purposes, or building houses, to get that land cheaper than he can get it at the present time. It will enable the man who wants work to
get work on easier terms. It will make more difficult the position of the "dog in the manger" owner who is holding back from mankind the opportunities of labour, and it will make easier the position of the man who wants to get work. That is the contribution to the solution of the unemployment question which is made in this Budget and although the tax may not be imposed for two years the mere fact of its imposition will make the position of the unemployed man easier throughout the whole of the productive enterprises of this country.
It would not be proper at this time to deal with the question of the taxation of land values because we shall have the details of the scheme later, and I wish on this occasion to offer my meed of thanks to the Chancellor of the Exchequer for other parts of this great Budget. The right hon. Gentleman has been accused of losing his financial and economic virginity, of sacrificing that absolute purity which has characterised him up to now. That may be so, but I would say that the right hon. Gentleman has, for the first time, come down to the level of mortal men, and has displayed a human touch in this Budget. All of us, to whatever party we belong, expected that in this year of unexampled bad trade we should have to meet the deficit by a substantial increase in direct or indirect taxation. Up to within a week before the introduction of the Budget we expected the worst. We have not got it. The addition to taxation is practically negligible and this respite affords the trade of this country an opportunity to recover.
Everybody knows that an increase in taxation does not necessarily, on strict economic lines, mean interference with the recovery of trade. I could name a dozen taxes which would not necessarily hamper trade, but the psychological effect of having no addition to the taxation of this country is, in itself, of inestimable service to the recovery of the trade of the country. We have all been expressing in private for the last six months the wish that "Philip would be human." We hardly expected it, but the right hon. Gentleman has become human, and I hope that the trade of this country will show the natural reaction to this respite and that the year to come will enable us to have the next Budget properly balanced. It is no
doubt inevitable that we should have both in Parliament and in the Press of the country Jeremiahs who deplore the fact that we are balancing this Budget by borrowing and who say that it will be a disaster to economic progress. We have already been told that the effect of these proposals will be that neither this Budget nor subsequent Budgets can be made to balance. I believe that the best chance of future Budgets being balanced is in this year's lapse, but let us remember, now, that the economic position of the country is no longer properly measured by the annual Budget of expenditure and receipts. What we require, what we have required for the last 10 years and shall increasingly require in future, is a supplementary Budget, as it were, covering increased indebtedness—the increase in national debt and the decrease in national assets.
This is a Budget, obviously, which would have horrified Mr. Gladstone, but, since the War, Chancellors of the Exchequer from both sides of the House, one after the other, have failed properly to balance their Budgets and have resorted to various "wangles" as I must term their devices—to keep the accounts square. For instance, the sale of national War stores was treated as income when everybody knows that it was a reduction in national assets and made the general balance sheet worse than it naturally was. Then, too, we had the question of the old War savings certificates, in regard to the interest on which we were treating as income what was in fact increased indebtedness. We had also raids on the Sinking Fund, the raid on the Road Fund, and the appropriations of a year and a-half's returns under Schedule A in one year—all thoroughly unsound methods from the point of view of financial purity and all involving the additional indebtedness of the State. Latterly there has been urged upon the country from all sides the financing by the Government of loans for various purposes. I am glad to have followed the right hon. Gentleman the Member for Northern Cornwall (Sir D. Maclean) on this question because the worst sinners, from the point of view of pressing the Government to finance loans for large national or Empire purposes, have been right hon. and hon. Gentlemen below
the Gangway opposite. Loans, too, must be checked and accounted for. Remember that every loan financed by this Government if it is not a paying loan, if it is not economically sound, must inevitably injure the financial position of the country.
We are increasingly borrowing money, and, as it were, flinging it about the world. The President of the Board of Trade knows that all the legislation for developing our export trade is involving us in liability for credits and loans to foreign countries, thus increasing the total indebtedness of the country. In the last year a sum of £3,000,000 has been advanced for making a bridge over the Zambesi in Portuguese territory—a loan from which we can never by any possibility get one penny piece of interest. That is a loan made in order to provide work for people in this country, but it is a loan which increases the indebtedness of the country and at the same time is not financially sound, or is not a loan which would be made by private interests or private capital. Then there is also the increase in the loans on the Unemployment Fund, and a loan is now proposed for buying up land in Palestine in order to settle Arabs and Jews upon that land. All these involve increases in the indebtedness of the country.
I ask hon. Members of the Committee to cast their minds around the earth for a moment to Australia, where exactly the same sort of thing has been going on, increasingly in the 10 years since the War. It always acts like a snowball. If we do not want to follow in the footsteps of Australia, we should have an annual stocktaking of our indebtedness in order to see whether the loans which are being guaranteed by the Government are being repaid and to examine the reductions in the assets of the Government. The danger of sliding into debt is greater, to my mind, than the danger of sliding into increased normal expenditure and I urge upon this Committee and upon the Government to consider whether we ought not to have art annual statement of the liabilities and assets of the country as a whole. Whether such a statement should extend beyond State loans and State assets and include national loans and national assets on the large scale, I do not know. But it is of vital importance that we should watch whether we are nationally
creating sufficient capital year by year to finance the increased liabilities which are launched in this country for enterprises all over the world. It does not fundamentally matter whether a loan is a State loan or a loan made by private enterprise. If capital is being lent to a larger amount than is being created in the country, then the financial position of the country is being worsened.
5.0 p.m.
I must say that one's fears in this connection may be fears for the future rather than for the past. If we look through the amounts year by year of the estates which come within the purview of the Estate Duty, it is perfectly marvellous to find how that figure rises year after year, in spite of the crushing taxation levied. It is quite possible that the Estate Duty in the coming year may actually realise the estimate of the Chancellor of the Exchequer. Therefore, at present, we do not appear to be lending more than we can afford but the danger of an increase in this lending is very great, particularly when it is urged upon the Government by Members on all sides. I would point out to the Committee that not only the Liberal party but the Conservative party too, were urging the right hon. Gentleman the Secretary of State for the Dominions when he was Minister in charge of unemployment, and are now urging the new Minister in charge of unemployment to borrow more money. You cannot make prosperity in any country by borrowing more money. All that happens when you borrow £100,000,000 or £200,000,000 is that, industry has not that £100,000,000 or £200,000,000 which the State has borrowed, and, consequently, industry has to pay more for the capital which it needs and, on the whole, the position of employment in the country is not improved by the direction of loans into State channels. I think it is important that that fact should be understood. We have all grasped the fact now that the money that you take from the ratepayers and the taxpayer and spend on providing work for the unemployed takes money out of the pockets of the ratepayer and the taxpayer, so that the ratepayer and the taxpayer are not able to spend the money themselves on employing people at making the things they want. I say we all grasp that, but it is quite time that
hon. Members opposite should grasp the fact that what is true of taxation and rates is equally true of borrowing. Therefore, if you are going to improve the financial position of the country, your economy must be expressed in borrowing as well as in taxation and rates. If you look at Australia, you will recognise it there—everybody recognises it to-day—that they have gone down that slope too far to stop. We have not yet gone down that slope too far to stop, and now the time has come to call a halt or at least to remember that there is not that easy way out of our present difficulties.
I believe honestly that the way out of our present difficulties has been indicated by the Chancellor of the Exchequer at the present time. I beg hon. Members to listen to me when I put this before them, that the only sort of work that we want to increase in this country is useful, productive work and not parasitic work. It is no good saying that your people will be employed on the carriage drive and estate grounds. We do not want that sort of work. We do not want rich people coming to live here in order to give people useless jobs. That is not an improvement in the state of production of the country. We have to confine ourselves to increasing useful, productive work.
Bear with me one moment longer. Useful productive work must begin by the application of labour to land. There is no sort of useful, productive work that can begin in any other way. You must start by some people getting at the raw material, the earth, in order to start work. Once you allow the iron trade, the building trade, or the mining and quarrying trade to get at their raw materials, to start the job, all the other trades in the country will come in naturally to complete the processes of manufacture and to distribute the goods, but if you bar off those men in the primary trades by charging them too high royalties or too high rates before they can get at the land, then you keep not only those men out of work, but everybody else out of work as well, and you check useful, productive work. If you want to increase that sort of work, do let the people of England get on the land of England and start work.

Mr. OLIVER STANLEY: I am sure that hon. Members on this side will have listened to a considerable part of the speech of the right hon. and gallant Member for Newcastle—under-Lyme (Colonel Wedgwood) in agreement; in fact, there was a moment when he was speaking when I wondered if when he crossed the Bar of the House lie had not taken the wrong turning, but it would interest one to know what was his feeling when he heard the Lord Privy Seal, speaking for the Government, say with pride that the Government had already contracted loans and obligations to the extent of £176,000,000.

Colonel WEDGWOOD: Just the same as when the hon. Member opposite got up and said they had done £27,000,000 in half the time.

Mr. STANLEY: I wonder what expression the right hon. and gallant Gentleman gave to his feelings in the voting Lobbies that evening. I think that all of us on this side will heartily join in the words of welcome which the right hon. and gallant Gentleman gave to the Chancellor of the Exchequer on his return. I long ago joined the great majority, consisting of Members of this House who at one time or another have felt the rough side of the Chancellor's tongue. After all, hard words break no bones, and, if the Chancellor's speeches have a certain edge, they also have a certain point.
Hon. Members on this side, fresh from fireside talks with the Prime Minister and random rambles with the Lord Privy Seal, heartily welcome the return of the Chancellor of the Exchequer, but what a different speech from that of a year ago! Then, the economic pedagogue, conscious of his own virtue, in fact ostentatiously wrapping himself in it, treated the right hon. Member for Epping (Mr. Churchill) as an erring student, not only correcting his faults, but ostentatiously assuming his burdens. Yesterday, the right hon. Member for Epping, when he sat there, heard, not the voice of a master, but the voice of a pupil, a willing and indeed a promising pupil, one proclaiming with modest loyalty that he was pressing along the paths hallowed by his predecessor's feet, and with conscious pride how he had even cracked a crib which had eluded the vigilance or
baffled the ingenuity of his master. In fact, if it had not been for the difference in the colour of the glass, one might almost have thought it was the right hon. Member for Epping opening the Budget yesterday.
This Budget is, of course, a complete gamble. I do not think the Chancellor of the Exchequer can deny it, and I do not think the Financial Secretary to the Treasury will attempt to contradict it. It seems a curious thing about political life in this country that it is inevitable that we have a gambler at the Treasury while we always have a puritan at the Home Office. Like all gamblers, the right hon. Gentleman has been inspired by the gambler's optimism. He has, like all gamblers, minimised the risks he has to take and exaggerated the advantages in his favour. He complained of those Members of opposite parties who had acted as Jeremiahs during the past few months and who had anticipated a Budgetary state far worse than the modest £37,000,000 which was the only gap which the Chancellor of the Exchequer claims to meet.
I have made several speeches in the last few months, and I have warned my audiences that an honest Chancellor of the Exchequer, making an honest Budget, with an honest estimate of revenue, and honestly taking into his annual expenditure those sums which were properly allocated to it, would have to meet a gap of not less than £80,000,000 this year. I was wrong; I should have said £90,000,000. The right hon. Gentleman tells us it is £37,000,000, but of those £37,000,000 he has provided for £7,000,000, and then tells the Committee and the country that he has gambled about the other £30,000,000. But this gamble is very much greater than that, because, to arrive at that figure of £30,000,000 he has, I think, exercised a completely undue optimism with regard to revenue and certainly made an unpardonable omission with regard to expenditure.
I should like to say, first of all, one or two words with regard to the estimate which the Chancellor of the Exchequer has given us of the probable revenue in the coming year, and particularly those figures which he gave us with regard to the proceeds of direct taxation. He tells us—and this, I must say, is staggering,
not only to myself, but to most people who have any knowledge of this particular form of revenue—that he anticipates from the Stamp Duty an increase of £4,000,000 over last year. To show how fantastic that estimate is, the Committee will see that the £24,000,000 which he expects to get is only £1,500,000 less than was actually received from this duty during the year 1929–30. The great Stock Exchange slump in America did not begin till the end of October of that year. Every slump of that kind is, of course, succeeded by a period of liquidation, when Stock Exchange transactions are still on a comparatively large scale and when, therefore, a considerable amount of Stamp Duty is paid upon transfers; and it seems to me incredible that we can expect during the coming year, when to-day Stock Exchange business is probably at a lower rate than it was at any period during last year, let alone the year before, that we can expect, as he does, from the Stock Exchange, as he himself said, an increase of this amount.
There is this further consideration, that a great deal of the Stamp Duty is an ad valorem tax, and that it is a stamp upon a transfer. The stamp, therefore, upon the purchase of a security is in proportion to the value of that security. When we consider the immense fall, the depreciation in values of securities in the last two years, is it really credible that an ad valorem tax is nearly going to maintain the proceeds of two years ago? Even if the Stock Exchange business were this year to recover the volume of two years ago, still, because the tax is an ad valorem one and values have fallen, the yield from that duty must he greatly below that of 1929–30.
Again, there is this further consideration, of which everyone is aware, that, although there is no authority for anybody to do such a thing, it is common knowledge that foreign lending is being discouraged in the City of London today, and that therefore during the coming year we are extremely unlikely to obtain more revenue from that source. I cannot, therefore, for a moment accept the estimate of the Chancellor of the Exchequer that we shall obtain an increase of £4,000,000 during the coming year from the Stamp Duty.
He has further estimated for an increased yield of Surtax. He has adhered
to the estimate he gave last year of the yield of the new Surtax in a full year, and he says he is entitled to do so, although he drops the estimate for Income Tax, because Surtax this year is payable with regard to the incomes on which Income Tax was paid last year. He made a mistake about the incomes of last year in regard to the Income Tax which is returned in this Budget. Why, therefore, are we not to assume that he will have made a similar mistake in the same incomes when he brings them into consideration for the Super-tax for this year? Income Tax last year fell £3,000,000 short of his estimate, and we are, therefore, entitled to wonder whether a similar deficiency will not be found in the Super-tax.
He has estimated further, with regard to the Estate Duties, for a rise of nearly £8,000,000. There, again, he adheres to the original estimate, that he made a year ago, of the yield of the increased duties in a full year. When we remember the catastrophic fall in values between then and now, can we really believe that the Chancellor of the Exchequer has found no reason to review an estimate which he made a year ago, at a time when he himself said he did not foresee the prolonged depression through which we have gone? To-day there is not a security in the country, with the exception of gilt-edged securities, that has not depreciated; there is hardly a foreign bond which is not at an immense discount; land, houses, property of all kinds are selling to-day lower than a year ago, and yet we are to believe that the Chancellor of the Exchequer's estimate, made a year ago, of the value of whatsoever estates shall come under these Death Duties during this year, will be unchanged by the events of the last 12 months. Were I a gambler such as the Chancellor of the Exchequer, I should not be frightened to risk a sum—modest, of course, but I should be gambling with my own money—that the estimate which the Chancellor of the Exchequer has given us for the revenue next year will be found to exceed the actual receipts by at least £10,000,000.
With regard to the expenditure, attention has already been called to the amazing omission from the Chancellor of the Exchequer's speech of any reference whatsoever to the loans to the Unemployment
Insurance Fund. We are borrowing today at the rate of £1,000,000 a week. That money is being lent by the Government to a Fund which we must all acknowledge is, in fact, bankrupt. Hon. Members opposite will be the first to say that they do not want to see the liability for the interest and sinking fund payments on sums which now amount to over £80,000,000, and at the end of next year will amount to over £130,000,000, piled on a new insurance fund put on an actuarial basis. We are doing exactly what Government officials have stated in public we are doing; that is, borrowing to meet annual expenditure, and a Budget which omits any reference to that tact is a dishonest Budget. If you take into account the annual expenditure—and sooner or later some Chancellor of the Exchequer will have to do it—you will find that the real gap for which the Chancellor has to provide is not £37,000,000, but £90,000,000 or more.
What chance is there that this gamble will succeed? What may happen to prevent the Chancellor of the Exchequer having to stand at that Box next year and confess a failure of his gamble, and have to ask the country for a burden of taxation such as has never been experienced before? There appear to me to be three alternatives that might save him. One, of course, is a General Election, and that, I imagine, is the one which lie considers the most probable of the three. For the moment, however, let us exclude that. Of the other two, one is a reduction of expenditure during the year which will enable that gulf to be bridged, and for the purposes of his reduction in expenditure, the Chancellor of the Exchequer talks lovingly and hopefully about the Committee on Economy. The other alternative is an increase of the revenue through trade revival. Let us discuss what real prospects there are of either of these two things coming to the Chancellor's aid and helping him in some way next year to bridge that gulf between real expenditure and real income which gapes so widely this year.
With regard to a reduction of expenditure, I see little prospect. We expect during the next few months a report from the Royal Commission on Unemployment "Uninsurance" Benefit—"uninsurance" was a slip of the tongue, but it
is just as good a description. Most of us believe that the recommendations of that Commission will be something on the lines of setting the fund upon an actuarial basis. Those who are interested in the matter will agree that the Royal Commission is sure to recommend that the system of borrowing should be put an end to, and that whatever system is adopted the expenditure on benefit should be taken from the Budget as an annual charge. The first result of adopting the recommendations of that Commission will not be a decrease in budgetary expenditure, but an increase. Whatever economies they may recommend, whatever reductions may be made in the total expenditure, the result, so far as the Budget is concerned, is that a certain sum will have to be taken in under the head of expenditure which is to-day ignored by the Chancellor of the Exchequer as merely borrowing. Therefore, we can look normally not to a decrease, but to an increase in expenditure under that main head during next year.
The Chancellor of the Exchequer talked hopefully, as he talked hopefully a year ago, of a conversion scheme for the £2,000,000,000 of War Loan, which would provide substantial savings and enable a reduction to be made of the £355,000,000 which is now allocated to the service of the Debt. We on this side of the House are just as anxious as the right hon. Gentleman to see a conversion scheme of that kind carried through, not merely because of the economies which it will bring to the national Budget, but because, I believe, that the existence of this enormous block of convertible but unconverted War Loan is having the effect of rendering the whole interest charges of the country inelastic. One of the surprises of this depression is the fact that interest has not followed the downward course of commodity prices, and that we still find an immense gap between long-term and short-term interest. One of the chief reasons for that is the existence of this enormous block of War Loan which has created a 5 per cent. mentality and has set the standard not only for Government borrowing, but for municipal and industrial borrowing, and it is of the greatest
importance that we should get that big block out of the way while we have a chance.
What chance is there while we have the present Government? During last year the technical conditions of the money market have been ideal for a conversion scheme. It is extremely unlikely—at least we hope it is, as we are looking for a trade revival—that we shall get such good conditions again. Nothing has prevented a successful scheme of conversion during the past year except a lack of confidence which this Government has created among the investors of this country. The Financial Secretary has a stock answer to that. He trots out time after time the same answer, in which I am certain he cannot believe. I will save him the trouble of repeating it, and of reading from a piece of paper supplied to him from under the Gallery. The price of 5 per cent. War Loan or 4 per cent. Consols at the beginning of June, 1929, compared with their prices to-day, which would, he would say, show how the Government have lifted the credit of the country. The hon. Gentleman knows, however, that that is no argument. He knows that the price of any security, including Government stock, of this kind depends on two factors—on the credit of the borrower, which is in this case the Government, and on the competition which the borrower has to meet. The test which the hon. Gentleman applies completely ignores that second fact.
I should like to give him some figures which are a much more relevant test of the course of Government credit during the past year. The first is the difference between the day-to-day money rate and the ordinary yield upon a Government security, because that shows the amount that a man is prepared to sacrifice for the convenience and security of having what is practically money rather than having a Government security. In June, 1929, a man lending his money to the bank from day to day was able to get a yield of £4 5s. a year upon it. In the same period, if he had invested his money in 3½ per cent. Conversion Loan, he would have secured a yield of £4 11s. When a Conservative Government went out, therefore, he was merely under the necessity of paying 6s. a year for the benefit of having money
which he could call on at any day, rather than a Government security where he had to run the risk of market fluctuations. To-day, the respective figures are £1 15s. and £4 7s. In other words, a man is paying to-day, instead of 6s. per cent. a year, £2 12s. a year to have money rather than a Government security.
The hon. Gentleman the Financial Secretary laughs. Let me give him another case. Let me give the comparative yield of French, American, and British Government securities on this date. On the 3rd June, 1929, the yield of 3½ per cent. Conversion Loan was ½4 11s. To-day it is £4 7s., a drop of 4s. The 3½ per cent. Liberty Loan yielded £3 15s., to-day it is £3, a drop of 15s. The 3 per cent. Perpetual Rentes yielded £4 1s., and to-day it is £3 7s., a drop of 14s. If the hon. Gentleman expresses this in terms of percentages—for he will realise that the bigger falls have occurred in the French and American securities, although the yields were lower than our own—then the fall in yield of the American security is 20 per cent., of the French security 17 per cent., and of the British security 4½ per cent. I ask the Committee to say that these two tests provide a very much better picture of the relative credit of the country than the test with which the hon. Gentleman has up to now attempted to delude the Committee, and show that during the past year a golden opportunity has been lost by the Government to convert this large amount of War Loan.
The hon. Gentleman emitted a denunciation against those who made attacks upon the credit of the country, and said that they were unpatriotic in doing so. We do not believe that it is unpatriotic to point out the real facts. Patriotism and truth demand us to say that we have a great country, a great people and great resources, but patriotism and truth do net demand that we should say that we have a great Government. Foreign observers are not frightened of the country but of its Government. They do not believe that we cannot recover but that we will not. They see us living in a condition of blind optimism, a fool's paradise, refusing to see ominous warnings or to take remedies because they are unpleasant, and they fear we shall remain blind until the ominous warnings become ugly facts and the unpleasant
remedies become useless because too late. Unless the Government are prepared to give the people of this country more reason for confidence than they have done in the past, they cannot hope from a Conversion Loan this year any substantial saving to offset the increased cost of unemployment.
The only other suggestion that the Chancellor of the Exchequer has for meeting this increase of expenditure is the Economy Committee, which was the product of the Liberal imagination and which has already achieved the results for which the Liberal party hoped; that is to say, it has kept the Government in, and has probably kept economy out. What is the good of asking us to believe that this Economy Committee will make substantial inroads upon the gap of £80,000,000, or even of the £30,000,000, unless at the same time we are told what the scope of its investigations are to be, and the limitations which are to be put upon it? Is it merely to discuss the number of typists in a particular office, or is it to take under review big questions of policy involving large expenditure of money? My impression from the speech of the Chancellor of the Exchequer at the time that the Committee was set up was that the larger questions were to be entirely removed from its purview, and that it was to be merely an examination into the business organisation and administration of Government Departments rather than a real inquiry into Government expenditure. In these circumstances, I cannot believe that we shall see any real reduction in expenditure during the coming year. If that be sc., and the trade revival, for which the Chancellor has given us no grounds, fails to materialise, then the gamble will go down, and we shall he faced next year with an intolerable burden.

Mr. SANDHAM: Cheer up!

Mr. STANLEY: The hon. Member has made every effort to cheer me up, and I am grateful to him for his continual interruptions. If he wishes to go out, I may say that I shall bear his absence with composure, and in that, I think, I shall not find myself alone. This is a gamble, but I agree with the right hon. Member for North Cornwall (Sir D. Maclean) and the right hon. Gentleman
who has just spoken that in certain circumstances this is not a bad time for a Government to postpone for a year a burden of taxation which must effectually crush any trade revival. It would be wise if any real steps were to be taken as a result of which we should find ourselves a year hence in a different position from that which we are in to-day; but if it is merely a case of postponing for one year unpleasant decisions which we fail to take to-day but will have to take then, the effect on the country can only be bad.
I am afraid the gamble must fail, because the right hon. Gentleman has the dice loaded against him. The dice are loaded against him by the Liberal party. The right hon. Member for North Cornwall has talked about economy, but we know full well that throughout the next 12 months there will be continual requests from those benches for more and more expenditure. Their price has got to be paid. It is not as high as it was a few months ago, but, still, it has to be met. The dice are also weighted against him by hon. Gentlemen behind him. At the moment they are staggered with the pleasure they feel in getting a Socialist Budget, at seeing the result of 30 or 40 years of self-sacrifice, effort and enthusiasm on behalf of the Socialist cause expressed at last in a real Socialist Budget. But that momentary feeling of contentment will pass away. Demands will soon be made upon the public exchequer, and the blackmail will have to be paid. More than ever are the dice weighted against the Chancellor by the Chancellor himself, owing to his obstinate adherence to old, worn-out, antiquated theories which make him reject the practical consideration of the only way which, as we believe, can afford any help to a trade revival, and might assist him with revenue. If it be the ill fortune of the Chancellor of the Exchequer to stand at that Box again next year, we believe he will have to announce the failure of his gamble of this year, a gamble which I think has no chance of success under a Socialist Ministry, but might well have succeeded with a Conservative Chancellor supported by a Conservative party in carrying out the Conservative policy.

Lieut.-Commander KENWORTHY: have listened with great attention to the speeches of the right hon. Member for Edgbaston (Mr. Chamberlain) and the
hon. Member who has just sat down, and I notice that the portions of their speeches in which they were most vehement were those dealing with the Unemployment Insurance Fund. The loudest cheers from the serried ranks, as they then were, of the Conservative party supporting the first speech on the Budget in this Parliament of the right hon. Member for Edgbaston were for that part of his speech condemning the Chancellor for daring to borrow money for unemployment insurance. He raised his arms on high, and said, "How disgraceful that there will be between £100,000,000 and £150,000,000 of debt on the Unemployment Insurance Fund." His was the party that insisted, with their friends, on spending £8,000,000,000 in destroying life. Are we to be arraigned for daring to run into debt to the extent of £150,000,000 for saving life? What is their alternative? We have heard nothing from them about their alternative, but I hope that before the Debate closes we shall be told the official view of what the Conservative party propose to do about unemployment insurance. [HON. MEMBERS: "Find work!"] The hon. and gallant Member for Bournemouth (Sir H. Croft), who made an interjection, will perhaps tell us.

Captain HAROLD BALFOUR: We Brill all tell you.

Lieut.-Commander KENWORTHY: It is all very well to talk about putting the fund on an actuarial basis, but let us get down to bedrock. What is proposed? Is it proposed to increase the contributions of employer and employed? Perhaps the hon. and gallant Member who used to represent the Ministry of Health in the Scottish Office can tell us when he speaks. I believe he is one of the rising hopes of the Conservative party. He exudes the true milk of the gospel of modern Toryism. Is it proposed to cut down the benefits? Is that the way in which to bring the fund back to an actuarial basis? [HON. MEMBERS: "Wait and see!"] No, the right hon. Gentleman, and his henchman, spoke with gusto of being able to eject my right hon. Friend from the Exchequer, and to put in a Conservative Chancellor of the Exchequer. That can only be done by a General Election. They must tell the people what they propose. They must be honest with the people. Is it proposed
to cut down the benefits or to increase the contributions? How is it proposed to bring the fund into an actuarial state? [HON. MEMBERS: "By Safeguarding!"] Is it proposed to put off the fund those who have exhausted their insurance right and, if so, on to what other fund? Are they to be allowed to starve walking about. [HON. MEMBERS: "We never said that!"] Do hon. Members opposite think they will starve walking about? At present they have just enough to live on. At the moment there is not much spirit among the unemployed, but if we let them come to real privation we shall soon see what will happen. If hon. Members opposite think they can allow the unemployed to starve, they are living in a fool's paradise.

Major ELLIOT: This question should be addressed to the Chancellor of the Exchequer, who made the statement on which the comments of my right hon. Friend were based. It is the Chancellor of the Exchequer who said those things, and not us.

Lieut.-Commander KENWORTHY: My right hon. Friend has been attacked and abused by hon. Members opposite for daring to borrow money for the payment of benefit. He has been called a gambler and a spendthrift.

Mr. STANLEY: Would the hon. and gallant Member consider it good finance to go on lending money to a bankrupt fund? Does the hon. and gallant Member anticipate that arrangements will be made to repay the £100,000,000 which has already been advanced to the fund?

Lieut.-Commander KENWORTHY: do not mind whether the fund is repaid or not—not in the least, As long as our credit can run the country in debt to the extent of more than £10,000,000,000 for the purposes of war, I am quite prepared to have the fund going into debt for the purpose of saving life until we can find work, until the trade revival comes. Until we can alter the whole system under which we live and make it possible for these men to get work, I am prepared to keep them alive, and also to increase the benefits. There is plenty of money available for the purpose. The luxury and wealth, the display and extravagance in this country are, under all the circumstances, perfectly appalling,
Has the hon. Member for Westmorland (Mr. Stanley) seen some of the great luxury hotels and blocks of flats being run up in London and other parts of the country? We hear great complaints of the sorry lot of the upper classes, the ruined aristocracy, but many of them manage to get away to the South of France for two or three months every year.

Mr. STANLEY: The hon. Member ought to ask the Secretary of State for the Dominions about the luxury hotel. He was at the opening of it.

Lieut.-Commander KENWORTHY: I myself was at the opening of one of these great palaces. There is a great deal of money available for such purposes. It does not alarm me when hon. Members talk about a debt of £150,000,000 on the Unemployment Insurance Fund. I only wish it had been possible to increase the benefits. I only wish it had been possible to increase old age pensions and widows' pensions, and I am quite prepared to meet the hon. Member in Westmorland, or anywhere else in the country, on this point. As long as we have wealth in the country which is idle wealth, goods which cannot be sold to the mass of the people because they cannot buy them, do not talk to me about £150,000,000 of debt! In the last 10 years, leaving out the two years after the Armistice, when we were demobilising, we have spent more than £1,100,000,000 on armaments without protest from the other side of the House, except the complaint that the amount was too small.
I must make one last comment on the speech of the right hon. Member for Edgbaston, whom I do not congratulate on his first essay as leader of the financial section of the Conservative party, and on the speech of the hon. Member for Westmorland. They cry stinking fish the whole time. It is always pessimism with them, and it is lowering our country's prestige in the eyes of the world to talk about our being bankrupt, about my right hon. Friend being a gambler, and about the country being at the end of its tether. It is utter nonsense, it is mere political backchat, and we in the House know it, but the worst of it is that these speeches will be reported in America and on the Continent of Europe, and they will depress British credit, and make
people, like Siegfried and others, write their ridiculous stuff about this country. The country is not ruined. There is a great deal of vigour and life in it, if only we could be relieved from the thraldom of the ideas which beset the party opposite and of the City of London, which has sabotaged my right hon. Friend from the beginning, with the talk about conversion loans, which they have practically prevented him from making. If there could be less of this pessimism and self-decrying, it would be very much better for the credit of the country.
Just one word about this wonderful device of the conversion loan. I wonder whether the hon. Gentleman has ever heard the story of the young man with a banking account who was very extravagant and financially inexperienced as well. I am not comparing him to the hon. Gentleman in any way; quite the contrary. The hank manager sent for him and told him he must not overdraw his account and must pay off his overdraft. He could not understand this at first, but eventually he said, "Oh, so I have overdrawn so many hundred pounds. That is all right. I will write out a cheque for that amount." That reminds me very much of the virtues of the conversion loan suggestion.

Sir GEORGE HAMILTON: Chestnut!

Lieut.-Commander KENWORTHY: Of course, it is an old story, but I tell it to meet an old argument.
During the speech of the Chancellor of the Exchequer yesterday the whole House enjoyed the vehemence of my right hon. Friend, because it was a sign of his restored good health, in dealing with the question of a revenue duty, this wicked, immoral device which certain people have dared to suggest, and he said it was very wrong to raise money by taxing imports. But my right hon. Friend, after this vehement onslaught on the principle of a revenue duty, instead of taking the duty off petrol, proposes to increase it to 6d. per gallon. The duty on petrol is a revenue duty par excellence, which, compared with the cost of petrol per gallon, means about 200 per cent. At the present time petrol is being imported at a cost of as low as 3rd. per gallon landed in this country. I was very much surprised after the vehemence of my right hon. Friend against raising money by taxing imports.
I want to ask the Financial Secretary when he replies to the Debate to tell me whether any concession is to be given in regard to this revenue duty on petrol—I use the words "revenue duty" for the benefit of the hon. Member for Huddersfield (Mr. J. Hudson)—and whether any rebate or allowance is to be given to those who use petrol for industrial purposes apart from driving the engines of vehicles? In my own constituency there is a very large industry which has to use petrol for the extraction of oil from seeds, for the manufacture of cattle cake and edible oil, and we have been pressing for the same allowance which was made during the War when petrol used in this way was given a rebate. Last year the Chancellor of the Exchequer met this request very sympathetically, and told the House that he had been left in such an embarrassing position that he could not give the concession asked for this year, but, at any rate, he gave a favourable reply as to what he would do in the next Budget.
My first question to the Financial Secretary is whether the petrol used for manufacture in this oil extracting process is to be taxed at the rate of 4d. or 6d. per gallon, or will the full rebate be granted? My second question is whether the 6d. duty will apply to turpentine and white spirit? Turpentine is a raw material which cannot be produced in this country, and the whole of it has to be imported. It is a basic raw material, and if you put a revenue duty on turpentine, why do you not place a tax on jewellery and furs and other luxuries? Why pick out turpentine? This is a tax which hits my constituents very seriously. No doubt the answer of the Treasury will be that the world price of turpentine has gone down, and therefore we can afford this 100 per cent. tariff—not my 5 per cent. revenue duty, but a 100 per cent. duty on an essential raw material for paint, varnish, linoleum and polish, which we cannot produce in this country. Our chief competitors in the manufacture of linoleum is Germany, and the German manufacturers get their turpentine untaxed. The same applies to white spirit. There is no reason at all why this impost should be kept on.
With regard to white spirit, the Treasury may say that it might be used for motor engines, but I am told that
that is not so, and that this spirit never has been used for motor engines. We practically got an undertaking last year that the Chancellor of the Exchequer would favourably consider the removal of this iniquitous tax, and I ask the Financial Secretary to tell me whether this matter will be favourably dealt with. I am not attacking the Chancellor of the Exchequer, but I am attacking this duty which was invented by' the right hon. Gentleman opposite, but the Chancellor has increased it and must now share the moral responsibility. I welcome the increase of the Petrol Duty used for the purposes of locomotion, because I believe it will have a protective effect on petrol produced in this country. I presume that the rebate will remain, and that the petrol made from our own coal or coal-tar will not be taxed. I understand that will be the case, and, therefore, it will have a distinct protective effect, and will encourage the home manufacture of petrol. My hon. Friend the Member for Huddersfield said that this would be no protection, but I say that it is a great measure of protection, which is necessary in order to encourage the production of oil from coal which is likely to become a great industry in this country and will be the salvation of the coal industry. I hope the tax will not apply to turpentine and white spirit, however, for they cannot be produced from coal. I make an appeal to the Financial Secretary to the Treasury to remember the kind words used on this point last year by the Chancellor of the Exchequer, and the kind words which I used, and I rely on the right hon. Gentleman's sympathy for a hard, struggling industry which feels the taxation on raw materials very seriously. I ask the Financial Secretary not to impose this duty on turpentine and white spirits for the sake of a few hundred thousand pounds.
I would like the Financial Secretary to say something about an important matter which was raised in the Press by the "Manchester Guardian" and other newspapers relating to the formation of a new international finance corporation. I understand the board of the Bank of International Settlements has been consulted in regard to this proposal. This matter is of tremendous importance from several points of view in regard to the question of future debt payments and reparation payments, the course of trade
employment and commerce. If we are going to form an international corporation with a suggested capital of £100,000,000 to grant to countries where a high rate of interest prevails, loans from the countries where there is a low rate of interest, it is not only a matter of money markets, but a matter which affects the whole budgetary position of this country, the whole of our commerce and our financial position generally. It is no use talking about unofficial conversations, because this is a matter which affects the Chancellor of the Exchequer very intimately. We must know what is going to be the policy of the Government and what steps we are taking for instance in regard to loans to Russia; and, if so, what effect this will have on our Export Credits machinery. We must also consider what the effect will be on our credit.
I do not like to think that these constructive plans for the rehabilitation of Europe are being carried on by negotiations with people in the City without any information being given to this House by the Government, because the country is tremendously affected by these matters. The Government have been two years in office, and they have had the best information they could get from their economic advisers. I think that this so far is the only international proposal I have seen for restoring trade, and I do not like to think that the Government have not had a prominent part in it, because it may well be the crux of the whole matter. I do not want to criticise the Budget. I agree that this Budget will be looked upon as a bold measure, but what lies beyond it if trade does not revive? How do my hon. Friends on the Treasury Front Bench propose to deal with the situation in which we would then find ourselves? For there is no certainty of a trade revival. We are not suffering from over-production so much as from under-consumption, and the inability of the mass of the people to buy the goods which they require and which we can produce in ever increasing abundance. Our ultimate success will depend upon what we can do towards the solution, of this problem of under-consumption, and upon that will depend the success and even the continuance of democratic government in this country.

Mr. BOOTHBY: The hon. and gallant Member for Central Hull (Lieut.-Commander Kenworthy) challenged the official Opposition to produce their policy in regard to unemloyment insurance. May I point out to the hon. and gallant Member that it is not the business of the Opposition to produce a policy; that that is the business of the Government of the day, or, at least, we used to think so until the present Government came into office. We have not been able to discover any constructive policy on the part of the Government to meet any difficulty; but. I will put forward two or three suggestions for the benefit of the hon. and gallant Member for Central Hull. Supposing you put the Insurance Fund on an actuarial basis, and that benefit is paid only to those who contribute. That would impose upon the Exchequer the necessity of providing for those who were unable to contribute, and they would form a considerable number. Even if you reform the very grave and serious abuses which exist, there would still be the necessity for the Exchequer to provide for those who were unable to contribute to the Fund. On this side of the House we should propose to raise the money by the imposition of a revenue tariff; and I think that is a very reasonable constructive policy. At any rate, that is the policy of the party on this side of the House. We should insist upon adequate and proper safeguards before we paid out this money indiscriminately; but the burden will ultimately have to fall upon the Exchequer, and this money must inevitably be paid by the Exchequer out of the revenue, year by year; and the additional money necessary we should propose to raise by a revenue tax.

Lieut.-Commander KENWORTHY: Can the hon. Member for East Aberdeen (Mr. Boothby), who, I presume, is speaking for his party, say why in that case those people were put off the fend under the last administration were allowed to go on to the Poor Law?

6.0 p.m.

Mr. BOOTHBY: So far as I know, nobody was put off the fund. I think the first feelings of those who sit on this side of the House in connection with the Budget were feelings of considerable relief; and whatever criticisms it may be necessary to make subsequently, it
seems to me that the proposals adumbrated cannot afford much satisfaction to hon. Members on the back benches opposite. That was obvious from their faces and general demeanour during the Budget speech. From our point of view, we must congratulate the Chancellor of the Exchequer upon having avoided any additions to direct taxation, and also upon his repeated references, throughout his speech, to the urgent necessity for economy. We shall now wait, with very great interest, to see whether he is aide to translate his admirable aims into practice; his intentions, at least, are obviously good, and are to be welcomed on this side of the House. The Budget proposals, and the Budget itself, seem to me to be the most tremendous, triumphant vindication, both of the policy and of the methods of my right hon. Friend the Member for Epping (Mr. Churchill). I have always thought that my right hon. Friend's services as Chancellor of the Exchequer were never adequately recognised in the country; but now, at long last, he has received the credit that is due to him for his work at the Treasury, and he has received it at the hands of his most bitter and venomous opponent during four arduous years.
To meet a temporary emergency, which it was reasonable at the time to suppose would never recur—the emergency of the General Strike and the coal stoppage, which involved a direct loss to the Exchequer of at least £80,000,000—my right hon. Friend resorted to expedients which the present Chancellor of the Exchequer then described as those of "a profligate and a bankrupt, with jugglery and deceit added." He said that my right hon. Friend was in the position of a condemned criminal who, by artful device, had obtained a temporary reprieve. And yet, without any comparable emergency, the right hon. Gentleman has now resorted to a precisely similar device in order to balance his present Budget.
The decision to use £20,000,000 of the Exchange Account for revenue purposes violates every canon of finance which the present Chancellor of the Exchequer has preached to us in this House for the last six years; but it is none the less to be welcomed on that account, and I think it is a wise decision in the circumstances.
The anticipation of Income Tax revenue under Schedules B, D and E, seems to me to be much more open to question. It means that a certain section of Income Tax payers, and not the least important section, will have this year to make an additional payment to the Exchequer amounting to £10,000,000, and you cannot get away from that. Quite frankly, I fear that this will hit some of the professional classes in this country very hard indeed, and they of all people least deserve to be hit, for they have borne the brunt of the burden of taxation, according to their means, during the last 10 years.
I am interested to see that the right hon. Gentleman, although he criticised it very severely for two years, has retained the total Debt charge fixed by my right hon. Friend the Member for Epping; and also that he has retained the new method of presentation of the national accounts, which was devised and put into operation by my right hon. Friend. When the present Chancellor of the Exchequer was in Opposition, he never tired of taunting the Conservative administration, and particularly my right hon. Friend, because of the inadequate provision made for Debt redemption. He even went so far as to declare, on several occasions, that a Sinking Fund of £50,000,000 was very much too low. Now we have changed all that; and we learned from the Chancellor of the Exchequer yesterday that "it is better to use our resources to stimulate trade than to make undue sacrifices for the reduction of debt." I quite agree; but these are strange words to hear from the present Chancellor, especially to one who had to listen year after year to his fulminations from this side of the House.
Now we know what we always suspected, namely, that the statutory provision which he made last year to make an addition to the amount for Debt redemption equal to the realised deficit of the previous year, was only so much eyewash. It was never intended to be anything else. But perhaps the most surprising feature of all in the proposals of the Chancellor of the Exchequer is the source to which he has turned for fresh revenue—our old friend the Petrol Tax. What did he say about that in 1998? I have an even better quotation than my
right hon. Friend who opened this Debate. The Chancellor of the Exchequer then said:
The consumer is going to pay.… I have always been opposed to a tax on petrol, and for the reason that I know the Revenue do not approve of such a tax.… The loopholes for evasion … are not closed now, and it would not require much ingenuity to run a whole army corps through the precautions which the right hon. Gentleman thinks he has erected… By this tax he is putting a tax upon what is the raw material essential.… for a vast number of industries."—[OFFICIAL REPORT, 25th April, 1928; cols. 934–5, Vol. 216.]
He compared the Petrol Duty to a tax upon coal; yet now he comes forth with a proposal to raise the present duty by 2d. He has fairly eaten his words over this; but he has eaten so many words in the course of his present Budget proposals that it is hardly worth while to pay much attention to them. It can be said of the present Budget, and of the proposals put forward by the Chancellor of the Exchequer as a whole, that, of themselves, they will not throw anyone out of employment, and that is something; but they will not put a. single man into employment. They are, as one would expect from the right hon. Gentleman, entirely unconstructive from first to last. In his reference to a revenue tariff, the Chancellor appropriately quoted the words of William Pitt, for that is about the period to which his economic views and ideas have now advanced. He used to be considerably behind that.
He made, however, one observation which did interest me. He said that the result of a tariff would be that our manufacturers would pocket money in increased prices. I want to ask the right hon. Gentleman, or the Financial Secretary, two questions on this point. Dues he really think that the profits of our manufacturers have been adequate or satisfactory during the last two years? And, secondly, does he think that prices are now too high? I do not want to open up the whole barren controversy of Protection and Free Trade this afternoon; but I would like to point out that Mr. Keynes, who, whatever the Chancellor of the Exchequer may say, is not a stupid man, has estimated that the rise in the cost of living, as a result of the revenue tariff proposals which he has put forward, would be less than 1 per cent.; and he rightly says that that is negligible compared
with the wage reductions which every Free Trader admits in his heart, if not openly upon the platform, are bound otherwise to take place.
There is one vital question to which I now desire to draw the attention of the Chancellor of the Exchequer and of the Financial Secretary, who, I know, is very much interested in it. The Chancellor said, towards the conclusion of his speech, that we shall be faced with a very grave situation "if the world depression fails meanwhile to lift." I want to ask what he has done, and what he is doing, to assist the recovery of world trade and to lift that world depression. He knows very well, and the Financial Secretary knows, perhaps, even better, for he has pointed it out many times from this side of the House, that a root cause of our problem at the present time is the rise in the price of gold, due to the shortage of gold for monetary purposes. This has brought about the catastrophe fall in world commodity prices which has taken place during the last two years.
This fall has increased out of all proportion the burden of every debtor, whether an individual or a nation. The hon. Gentleman knows also that, as long as 1922, the Genoa Conference, in a series of resolutions, urged international action to economise the use of gold, and to stabilise its value in terms of commodities, because otherwise it is hopeless to expect to get a. stable price level. In that connection, I would like to quote from the words of Lord D'Abernon in a most interesting pamphlet published a few weeks ago, in which he said—and these words are peculiarly applicable to the present Chancellor of the Exchequer—
There is a tendency in orthodox circles to-day to do nothing, and to await the turn of the tide; but financial maladies are not all of a tidal nature, and supine expectancy is not necessarily the highest wisdom… Once recognise that, broadly viewed, commodities compared with one another have had no abnormal fall, but that gold has appreciated in relation commodities, and the rest is easy. World arrangements regarding gold are out of step with production and development. It is for England to take the initiative in putting this right.
The right hon. Gentleman has taken no action whatever in this connection, although some of us on this side, and some hon. Members opposite, have pressed this argument upon him, not
once, but 20 times. Even the Macmillan Committee, in which he constantly seeks refuge, has failed to report so far; and when we have asked him to accelerate its report, he replies most indignantly that he will not do so. I ask once again the Financial Secretary, when he comes to reply, to say what the Government have done, or what they are doing, or what they propose to do, to take international action along the lines I have suggested, in order to try to relieve the present world depression, upon which they place the whole of the blame for the present industrial situation, and for the unemployment and depression in this country.
In conclusion, I would like to say that this is a makeshift Budget; the Chancellor of the Exchequer practically admitted that that is so. Further, I would like to say that it is fundamentally a dishonest Budget. I am quite convinced, with my hon. Friend the Member for Westmorland (Mr. O. Stanley), that the estimate of the yield from Income Tax will prove to be far too high. Profits have fallen to a far greater extent than the £8,000,000 reduction for which the Chancellor estimates. I also agree with my hon. Friend that it is fantastically optimistic to suppose that the Stamp Duties will yield £24,000,000 during the current year, for there is no present indication of renewed Stock Exchange activity, and I cannot see upon what foundation the Chancellor bases his optimism.
But the really wicked thing, as Members on this side of the House have pointed out already, and as my right hon. Friend who opened the Debate pointed out, is to ignore, as the Chancellor did ignore in his Budget statement yesterday, the Unemployment Insurance Fund and all that it implies. In the year 1930–31, the revealed expenditure was £37,000,000; but, in addition, there was a concealed expenditure, by borrowing, of £35,000,000. In the year 1931–32, the estimated expenditure is £45,000,000; but £50,000,000 more will have to be borrowed. And the debt of this fund now stands at over £70,000,000, and is mounting at the rate of £1,000,000 a week. I want to ask the hon. Gentleman, I want to ask the Chancellor of the Exchequer, does he really expect the fund to repay this debt? He knows
that it cannot repay it. We all know that, sooner or later, the Exchequer will have to find this £70,000,000, and the additional millions by which the debt of the fund is mounting week by week. If the problem of handling the unemployed were being honestly tackled, the Chancellor of the Exchequer would, over and above the provision that he is now making, require to pay benefit, under the existing law, to about 1,600,000 uninsured unemployed people.
As long as we continue the present Rake s Progress of indefinite borrowing on the security of a bankrupt fund, so long will the equilibrium of the Budget be destroyed; and the whole financial stability of Great Britain will justifiably be called in question, not only in this country, but abroad. It is no use the hon. and gallant Gentleman getting up and saying that by making statements of this sort we damage the credit of this country. It is a fact that, until and unless we get a Government in this country which is prepared to face up to the problem of the handling of the unemployed, so long will our budgetary and financial stability be rightly called in question, because this practice which is going on at the present time vitiates the whole of the Sinking Fund and Debt provisions which have been made.
There are no signs at present of a trade revival, and, as far as I can see, the Chancellor of the Exchequer is not only doing nothing to help to bring about such a revival, but is doing a good deal to prevent it. There is no confidence in the present Administration. There is no reason to anticipate that the Unemployment Insurance problem is going to be tackled by the present Government. There is no reason to anticipate that the Chancellor of the Exchequer will be able to make considerable economies during the financial year, and he certainly will not be able to do so unless he tackles this question of Unemployment Insurance. What indication is there that he is going to be allowed to do that? Of course, he wants to do it, but hon. Members on the back benches opposite will prevent anything happening as long as they possibly can. Finally, the Chancellor of the Exchequer has definitely rejected, and finally rejected so far as he is concerned, the only practical scheme for raising fresh revenue in this country at the present
time. In consequence, he has had to budget for a substantial deficit next year. And in these circumstances, although for the moment we may breathe a sigh of relief that the actual proposals before us do not involve fresh additions to direct taxation, from a broad point of view, and apart altogether from the immediate proposals of the Budget, the prospect for the future gives cause for very deep anxiety, and even for grave apprehension.

Mr. WISE: I was immensely interested in what the hon. Member said about the Genoa Conference. He reminded us that that conference and every conference that has considered the international situation in the last few years, has put its finger OD the distribution of gold as the main cause of the present general world slump. He quoted Lord D'Abernon as saying that England should take the initiative. The hon. Member knows perfectly well that the initiative in the matter does not rest there. It rests in the City of London. It is not for the Treasury to take the initiative. It is for the Bank of England. The hon. Member himself was assisting the right hon. Gentleman the Member for Epping (Mr. Churchill) at the Treasury fur many years, and during the period from 1922 to 1920 Governments representative of his side were in office. All that time the recommendations of the Genoa Conference stood on record. I should like to know—I am sure it must have occurred to him when he himself was attached to the Treasury—what reply was made by the right hon. Gentleman when the hon. Member put the question to him that he has now put to the Treasury?

Mr. BOOTHBY: My answer to that is that the position then was not comparable to the present position. The fall of commodity prices has been 40 per cent. in the last two years. The position has now become so grave that the Government themselves ought to take action.

Mr. WISE: The position is precisely the same, save that we are two years further from the Genoa Conference. The world circumstances are the same. The general problem is in all its important aspects very little different. When the hon. Member says the Government should take the initiative, what does he mean?
Does he mean that the Government are to over-ride the Bank of England? Does he mean that they should take control of the Bank of England? Does he mean that they should fulfil their responsibility and take the initiative in these problems of world finance? If that is what he means, I invite him to come to these Benches as quickly as possible, because that is the very kernel of our conception of the proper line of approach to these financial problems. Here is the weakness of the Chancellor of the Exchequer. Here is the weakness of the Government in the whole of their policy. They are trying to work a system in which, as we believe, they do not believe. They are drifting steadily to greater and greater difficulties and they try to apply a part, but not the whole—I am glad he has not gone as far as that—of the policy of hon. Members opposite.
This has been a very interesting and a rather curious Debate. I can well understand the satisfaction which hon. Members below the Gangway opposite feel with the Budget. They have nothing but praise for it. It is the sort of Budget which would certainly have satisfied the late Mr. Gladstone. I can well understand the satisfaction of the right hon. Gentleman the Member for Epping. We look forward to his speech with very great interest. Beading through the peroration of the speech that he made on the similar occasion last year, I could well believe that the Chancellor of the Exchequer, in framing his policy yesterday, had borne that peroration well in mind. "Economy—no extension of the social services. We have to get the money. We have not to increase, but to reduce taxation." I say nothing as to the expediency of raiding capital reserves here and there, because that has been dealt with, but the essence of this Budget is that the Chancellor accepts to a very large degree the whole basis of the financial policy of hon. Members opposite. It is true that they have not gone the whole way, and it is because they have not gone the whole way that they are finding themselves in difficulties about the revenue. Hon. Members opposite say, "You must not put any more on direct taxation. You must not tax industry." The Chancellor, accepting that point of view, finds great difficulty, as is plain to everyone, in balancing the Budget.
Hon. Members opposite, some below the Gangway, some economists who have always been associated with the party below the Gangway, and an hon. Friend on these benches, say that the way out is a Revenue tax. I am not sure, if you accept the hypothesis of the Chancellor and of hon. Members opposite, that that is not the only way out. If you look at the figures, it is plain that the Chancellor has, at any rate, accepted not only a good deal of the principles which the right hon. Gentleman the Member for Epping expounded last year, but he has accepted also the essence of the policy which he urged on him last year, which was that the Chancellor should put no more direct taxation on the Income Tax or Super-tax payer, but should gamble on the chance of a recovery in trade. It has been argued, and it is always argued from those benches, that, if you do not put taxes on the Income Tax payer, you give him that confidence by which alone trade can be restored. If hon. Members opposite have not learnt the inadequacy of that method from the experience they had when the Chancellor of the Exchequer substantially reduced direct taxation in the last Government and unemployment increased, they might have learnt some of the irrelevancies of that method to the circumstances of trade and social conditions to-day by what has happened in the United States. Over a period of years the United States have steadily reduced direct taxation, repaid debt and done all those admirable things so dear to the hearts of hon. Members opposite, and of some on this Front Bench, and yet this year the United States has a deficit of something like £160,000,000. When hon. Members opposite say their way of meeting these difficulties is to get revenue by a Revenue Tariff, I would draw their attention to the circumstances of most countries, European and others, that are dependent on tariffs as the method of raising revenue. Hardly one of them, with the exception of the Free State of Ireland—which is only a partial exception—but faces this year with a very serious deficit—£160,000,000 in the United States, £60,000,000 in Germany, and the same in most European countries.
What troubles us on these benches is not what the Chancellor has done. In a negative way it is a very excellent
Budget. He has avoided, at any rate, two of the dangers which some people feared—taxation of foodstuffs and a Revenue Tariff. We are troubled by his apparent reliance on some miracle in the way of economy. I look at the figures in the Budget for Unemployment insurance. I find that, apparently, the transitional benefit is to cost about £30,000,000. I read the first line of the Treasury Memorandum to the Royal Commission on Unemployment Insurance, in which the basis for transitional benefit it put at £35,000,000 to £40,000,000, or even more. What are we to understand from that? Are these appeals which the Chancellor made to the Economy Committee and to the Unemployment Insurance Commission to be regarded as implying something in the nature of a threat? If the Unemployment Insurance Commission cannot substantially reduce the cost of Unemployment Insurance, as far as I can see the situation, the whole budgetary basis goes by the board. Is not the effect of that likely to be that the Commission feel that it is up to them, and that the Government expect them by this means or the other, at whatever cost to the unemployed man or to the scheme, to reduce the cost to the Exchequer so as to save the country from the appearance of temporary bankruptcy? It is a very dangerous position. In the lest few days the Trade Union Congress has put forward its own proposals for dealing with the unemployment insurance system—a very comprehensive, ambitious proposal, but involving inevitably the direct acceptance by the Treasury of a larger responsibility for unemployment insurance than is the case at present. If we are to take the speech and the Estimates and figures of the Chancellor at their face value, I am afraid we must assume that the door has been banged, bolted and barred in the way of any development on those lines. I cannot believe that that is the case. I must believe that the Government have something up their sleeve, home hidden reserve designed to meet a situation which is as serious as it can be. I should be very glad to hear from the Financial Secretary that that is the case.
The whole attitude of the Government to the question of direct taxation is based, as far as I can see, on the same hypothesis as that of hon. Members oppo-
site. The Chancellor said, in effect, as I understand his case, that we have reached the limit, temporarily at any rate, of direct taxation, and that the country cannot stand any more. That is a point of view which is repeated from the other side with such persistence that, I suppose, at last they are corning to believe it, but it has been repeated in almost every Budget discussion for the last 30 or 40 years. There is nothing in the figures of this year to justify those assumptions. Income Tax and Super-tax show an increased yield roughly proportional to the increase in the rates. There is no serious flagging in the yield of Income Tax. There is no serious flagging in the income on which tax is assessed. The hon. Member said just now that profits were diminishing—that there was a big drop in the profits on which Income Tax was assessed. Figures published by the "Economist" do not seem to bear that out. In regard to well over 1,000 companies whose balance sheets were published in 1930, the "Economist" figures show that the net profits were at the rate of 9.8 per cent. on ordinary and preference capital after all debenture and other charges had been paid. That does not look very unhealthy.
The truth of the whole matter is, that rather a curious thing has happened in regard to the profits of companies and industry and commerce generally. While it is true that in the staple trades, such as shipbuilding, steel, and cotton, the profits are very low, in a good many other trades profits are extravagantly high. The enormous drop in raw materials with a much smaller drop in the prides received for manufactured goods or in the charges made for services of a distributive and commercial kind has yielded, undoubtedly, a very much larger profit to those engaged in those operations. As far as one can tell, the total national revenue on which the Exchequer can levy taxation under one head is almost completely offset by an increase under the other.

Mr. BRACKEN: Can the hon. Gentleman, give us any instances of that, or state upon what authority he bases his statement?

Mr. WISE: Certainly. The average profit on tobacco shares is 20 per cent.
The profits on shops and stores is between 8 and 9 per cent. The profit on breweries is well over 10 per cent., and in most of those particular industries the profit is calculated on a very large proportion of watered capital. When you come to examine the real profit, you find that the percentage figures come out very much higher.

Mr. BRACKEN: The hon. Member has said that there has been no drop in these profits.

Mr. WISE: There is no serious drop.

Mr. BRACKEN: The hon. Member says that there is no drop.

Mr. WISE: As the hon. Member knows, Income Tax is levied on dividends.

Mr. ARTHUR MICHAEL SAMUEL: I have in my hand the "Economist" for 18th April. Under Schedule D, the analysis of actual income, the amount fell in 1929–30 from £1,064,000,000 to £1,060,000,000. Consequently, this is directly contrary to the statement which the hon. Member has made.

Mr. WISE: I said that the drop was very small comparatively. It has dropped from about 10 per cent. to 9.8 per cent., and if that is a justification for the speeches which have been made opposite, or the prophecies made at this time last year, I should like to know what they would have said if there was any really substantial drop.
There is another point which hon. Members are constantly making in speeches in this House and in the country. They say that it is essential to reduce taxation, because direct taxation—Income Tax and Super-tax—is higher in this country than in any European country. That is not the case. I would direct the attention of hon. Members opposite to a very remarkable inquiry made by what, I think, is the biggest group of related companies in Europe at the moment, the Unilever combine, with functions, manufactures and rights in most European countries. They have found it necessary to estimate very accurately what is the burden of taxation in those various countries. That inquiry has been partially published in the "Economist," and it has been very elaborately examined by the people whose incomes depend upon it. I am assured, and it has been accepted, practically speaking,
without question, that that inquiry shows that in respect of incomes of from £500 to £3,000—and that includes 98 per cent. of the Income Tax payers in this country—the actual amount paid in direct taxation in this country is less than in France or in Germany, and, over most of the range of the income, it is less than in the Scandinavian countries or in Holland. That inquiry, which is the only exact inquiry which has been made into these very relevant facts, is completely at variance with the case so constantly and frequently put by hon. Members opposite.

Mr. BRACKEN: The proprietors of Unilever make it clear that they have already discovered that this inquiry was so restricted at the source that they are not prepared to make any generalisation upon it, and, in fact, they have now proposed to make a world inquiry, because they think it somewhat fallacious to base a conclusion upon the present report.

Mr. WISE: What relation Income Tax in Timbuctoo can have to comparative taxation in Germany, France, Holland, Belgium and in this country, I do not know. I have a report dated 3rd March, and it is true to say that, as far as Belgium is concerned, Belgium is the only country in which the inquiry shows the burden of taxation was less than in this country. As far as Belgian figures are concerned, they have decided if necessary to revise them upwards. As far as Denmark, which I did not quote, is concerned, some flaw has been discovered. The conclusion as far as the comparison of taxation in European countries is concerned is, as I was informed a few days ago, unassailable, at any rate on present information, and that is the only exact inquiry that has ever been made. Until the last few weeks there have been no exact figures on the point, and the exact figures available are absolutely against the contention that direct taxation upon the incomes of 98 per cent. of the Income Tax paying classes is higher here than on the Continent. Direct taxation in Germany and France is very much higher than in this country. The fact of the matter is that the case so confidently put forward that there is no margin for further direct taxation in this country, is neither supported by the statistical facts nor by the every-day experience of anybody who moves up and down the country.
I wish to deal with another point about the Budget which very much worries me. The Budget, as we understand it, is not only a statement of policy which shows the intentions of the Government for dealing with the mere balancing of Treasury income and expenditure, but it should indicate policy over a very much wider range. I remember the first sentence of a small book on the "Socialist Budget" written in 1907 which runs as follows:—
The Socialists look to the Budget as a means not only of raising revenue to meet inevitable expediture, but as an instrument for redressing inequalities in the distrbution of wealth.
That was what the Chancellor of the Exchequer thought in 1907, but in 1931 he seems to have been so impressed by speeches made from both benches opposite that he appears to have overlooked it. We on these benches look to the Budgets of this country to provide the wherewithal for carrying into effect the policy for the extension of the social services, which we regard not only as an act of justice, but as the right and direct method for dealing with the slump in many trades at the present moment. I have not the time to pursue the economic arguments bearing on that point, but they have been dealt with before. We look to the Budget for wider purposes still. At this moment, as the hon. Member for East Aberdeen (Mr. Boothby) said, there is general agreement that the world economic crisis is largely, if not mainly, due to financial forces. There is general agreement that the attitude and the policy of the London Money Market are the main factor, or one one of the main factors, in governing world financial policy. There is general agreement, or will be general agreement, I think, that Treasury policy has a very important, if not almost a predominant influence in affecting the general financial policy of the London Money Market.
For several years now, the Treasury have pursued a policy which we have understood to be directed to the possibility of a conversion operation, and in his speech yesterday the Chancellor of the Exchequer again held out the hope of conversion as a justification for a good deal of his Budget. Except for that reference to conversion, he made no sort of reference at all to the world financial conditions which hinge largely upon the policy of the Treasury and the policy of
the banks in this country. Following the desire for creating a favourable position for a conversion operation, we have had this policy of the. Treasury co-operating with the City of London in schemes of deflation, or, if you like, partially rigging the money market, which has had such a disastrous effect upon British trade. There is general agreement among economists that there is no lack of capital available at this moment. Savings are being maintained in a very remarkable way. What has happened is that consumption, for financial reasons, is below the level of savings, and for various reasons savings are in excess of investments. In this country we are faced with an extraordinary condition of a surplus of capital, as you can gather from waiting investment, from the returns of the banks, and from the growth of money on private deposit in banks.
Great industries are unable to get capital for the reconditioning, reconstruction and reorganisation which, it is admitted, they so badly need. Take the question of the iron and steel industry or the cotton industry, or half a dozen other industries, in all of which the situation is that a great expenditure of capital is necessary in order that they may be put into a position properly to fulfil the functions for which they exist. They want new machinery, they want new blast furnaces, and they want an immense amount of new equipment. When the Lancashire Cotton Corporation went to the market the other day, it was able to find only £95,000 from the investor out of the £2,000,000 it had tried to obtain.
That is a very deplorable and serious situation. The causes of it are various. The hope cherished by the Treasury in regard to a conversion operation is one of the causes. Another cause is the fact that at this moment one of the changes that has been brought about since the War is that a great part of the investable money is in the hands of corporations, insurance companies, trust companies, and so on, which are able at will to divert it from one particular purpose to another. It is a very remarkable contrast that when the Lancashire Cotton Corporation, with the Bank behind it, is unable to get the money it requires for re-equipping its mills, and when the iron
and steel industry is held up month after month and year after year and is unable to get the finance that it requires for its purposes, there is apparently no lack of finance for luxurious hotels, new bank buildings and other objects of that sort.
What is the policy of the Government in this matter? Are we to wait another two or three years until the conversion operation is carried through? Are we to wait until private enterprise is able to screw out of a very depressed and diminished cotton industry the terms which it thinks suitable, or are the Government going to take, as they ought to take, their full responsibility, abandon the fantasy of a conversion operation, abandon the view that it is the business of a Socialist Government to leave these things to the chances of the market, and take the initiative resolutely in order to secure that national resources shall be applied to the most important national purposes. If the Government succeed to the utmost in converting the £2,000,000,000 worth of debt which is available for conversion and to reduce the interest by ½ per cent., or even 1 per cent., after one has made allowance for the loss of Income Tax, the national advantages to the Budget are not worth bothering about compared with the loss which the present delay is causing. The most successful conversion operation in the history of the British Treasury, the Goschen conversion, saved us only £1,500,000 of annual charges. For years now the Government have been pursuing this hope. It is a false hope, and is not worth bothering about.
It would be far better for the Government to abandon the policy of restriction, and to recognise their responsibility not only for balancing the Budget but for utilising the resources of the country in expanding and not contracting industry. Instead of following the views of hon. Members opposite, hampering the whole development of our Socialist policy, crippling the possibility of carrying into effect the expectations that were given to the pensioners and the unemployed, and leaving industry to be starved of the capital it needs for development, expansion, reconstruction and re-equipment, they ought to pursue the Socialist policy in regard to finance which sooner or later this Government or a later Government will be bound to
initiate. It is clear that in industry and in finance the old methods are breaking down. I wish the Chancellor of the Exchequer had faced that fact and had dealt with it in this Budget and, whatever may be the views of hon. Members opposite, had provided us with a Budget not only satisfactory from the negative point of view, but much more satisfactory and inspiring from the positive point of view in its attack upon the existing difficulties of industry and finance, and in providing the wherewithal for that Socialist reorganisation when we on these benches desire.

Captain BOURNE: The hon. Member for East Leicester (Mr. Wise) has wandered over a very wide field. I would suggest to him that, possibly, one of the reasons why the investor is not very willing at the moment to put his savings into the reconstruction of the cotton trade or of the iron and steel industry, is the type of speech which the hon. Member has just delivered. In any case, it seems to me that putting forward a sum for the reconstruction of a depressed industry at the present time is somewhat of a speculative investment. We hear much about the merits of reorganisation and rationalisation, but we are not told whether if those processes are carried out the result will be quite as good as we hope. Speeches like that of the hon. Member which suggest that the only object of rationalisation is to facilitate the adoption of the full Socialist policy for which the hon. Member and his friends stand, are not likely to encourage the confidence of the investor.
I have always been somewhat puzzled at the point of view of the hon. Member and his friends. They say—and they quote the earlier writings of the Chancellor of the Exchequer in support of their view—that the particular object of Socialist finance is to effect a more equal distribution of wealth. At the same time they say that the social services and the burden that they entail upon the nation should be placed upon the shoulders of those able to bear them. It seems to me that those two ideals are hopelessly incompatible. You must encourage the direct taxpayer if you want money out of him for the social services, and I should have thought that hon. Members opposite would facilitate the growth of wealth and make it easier for people to become direct taxpayers and even Super-
tax payers in order that they may have an increasing fund from which to draw money for the services which they need. It is obvious that the social services of the nation will remain whether the wealthy people remain or not, and if the wealthy people do not remain, we shall be able to finance those services only by very heavy taxes upon those who are less well off.
I should like to turn to the speech of the Chancellor of the Exchequer and some of the financial proposals which he has made. I think the general feeling in the Committee yesterday was one of surprise when they heard his statement. It is true that there was some relief, because we were all glad to feel that, at any rate, for the next 12 months we are to be called upon to pay very little additional taxation; but it reminded me of that relief which may be experienced by a condemned criminal who is told that his execution has been postponed for a week, and that it will then take place under some more humane methods. The right hon. Gentleman has not balanced his Budget. He has left himself with a very heavy deficit to meet next year, and he has not made any provision for meeting it. He is, like Mr. Micawber, waiting for something to turn up, and unless he is fortunate and something quite unexpected does turn up, whoever stands at the Treasury Box this time next year will be faced with the necessity of imposing very heavy taxation, even if we assume, and I for one hesitate to assume, that the Estimates of the Chancellor of the Exchequer are likely to be realised in the course of the coming financial year.
It is a Budget which has suspended the very Clause which the Chancellor of the Exchequer put into last year's Finance Bill to ensure that any Chancellor of the Exchequer who has a deficit in one year must meet it in the next year by taxation. I presume that that Clause will he withdrawn. A Budget from a Chancellor of the Exchequer who has always stood for the utmost orthodoxy in finance fills me with astonishment when I find that he adopts the course not of raising the level of the Income Tax, but of putting the screw on one section of Income Tax payers by managing to anticipate payment. When I heard that proposal I felt very much
as I should have felt if I had gone to Epsom on Derby Day and had found there the President of the And-Gambling society, dressed in a loud check suit, acting as a book-maker. I was more astonished at the speech of the right hon. Gentleman yesterday than at anything that has occurred since I have been in this House.
The right hon. Gentleman has made up his Budget with a balance of £134,000 on a total Budget of £800,350,000. It is an extraordinarily narrow margin even if there are no Supplementary Estimates and that seems very unlikely from our experience of the present Government. It is remarkable to notice how the right hon. Gentleman has achieved that very small surplus. A sum of £10,000,000 is taken out of the Income Tax payers under Schedules B, D and E by the anticipation of one-quarter's payment next January. That is not only a dodge but a had dodge, and one which is likely to fall with particular heaviness on those who can least afford it, namely, the lower paid class of salaried Income Tax payers who are paid monthly and have not very much resources with which to meet their taxation. They will be hit at a time of the year when we all know that we have the biggest demands on our purses, and this new imposition will fall upon the men who can least afford it.
The right hon. Gentleman is also taking £20,000,000 out of the Exchange Account. I have often heard him inveigh against the immorality of taking a capital account to pay current expenses. If I understood him aright, he is taking in miscellaneous receipts an additional sum of £3,000,000, which represents the profits on the Exchange Account, so that the sum taken under this head is £23,000,000 and not. £20,000,000. If this account is to be reduced, as it will be, to £13,000,000, it is clear that in another year the Chancellor of the Exchequer cannot look forward to another profit of £3,000,000. He may be able to get something out of the remaining account, but it is bound to be very much smaller. Therefore, this is a raid which cannot be repeated. He is taking money from a source from which he can only take it once. The £23,000,000 taken from the Exchange Account and the £10,000,000 from the anticipated Income Tax, amount to £33,000,000 of the money required to make up the deficit.
7.0 p.m.
To make up the balance of the deficit in revenue the right hon. Gentleman has put on an increased Petrol Duty which he hopes will bring in £7,500,000 in the current year and £8,000,000 in a full year. On that he is gambling simply on a revival in trade. He gave us no reason for being optimistic. It seems to me that in the coming year 1932–33 we cannot anticipate a very much larger revenue than he has estimated for the year under consideration. Therefore, owing to the fact that he has balanced his Budget by means of a raid on the Exchange Fund, whoever is Chancellor of the Exchequer next year will probably have to find something like £35,000,000 before the Budget of the next year can be made to balance. In that respect I would draw the attention of the Committee to certain words used by the Chancellor yesterday. He said:
I have made no provision for supplementary expenditure. It would be contrary to all experience if no item should arise during the year calling for a Supplementary Estimate. If prosperity should return, it may well be that a margin will be found in the form of a yield from taxation in excess of the forecasts I have made. Apart from this, I definitely contemplate that any gap which occurs in the finance of the year should be met by economy, and for that reason I shall anxiously await the recommendation of the committee which is at this moment examining the field of national expenditure on the instruction of all parties in the House of Commons.
A little later, the Chancellor went on:
For these reasons, it will be for the House to take carefully into account the proposals that may emerge from the work both of the Economy Committee and the Unemployment Commission … If we can effect substantial economies during the year, and if there is some improvement in trade, I do not think next year's Budget will be unduly alarming, but failing this a heavy increase of taxation will be inevitable next year."—[OFFICIAL, REPORT, 27th April, 1931; cols. 1408–9, Vol. 251.]
The first thing that has to be done, long before we go on to the question of any Supplementary Estimates or details of that kind, is to find some method of saving the £35,000,000 to be met this year. Of the total Supply Services of the year, which are estimated at £439,000,000, that amount is approximately 8 per cent. I ask the Financial Secretary whether he or any hon. Member of this Committee considers it would be possible in one financial year to save on the Supply
Services to the extent of 8 per cent? There has been considerable economy in the course of the present year, due to a fall in the cost-of-living bonus. If trade revives there is some likelihood, according to the expert economists, that there will be some rise in prices, and that will be reflected in the cost-of-living bonus. In that case a considerable addition may be expected in the Estimates, should there be a trade revival. If there is not a trade revival, the cost-of-living bonus will remain as it is, but then there will be no increase in the yield of taxation. The Chancellor of the Exchequer is simply gambling on the hope that somehow or other he will pull through, and he has made no provision at all for such contingencies. On the subject of Supplementary Estimates, the right hon. Member for North Cornwall (Sir D. Maclean) said the. House would, of course, have to scrutinise every Estimate very carefully. That is quite true, but, after all, Supplementary Estimates arise on questions of policy. They do not normally grow like mushrooms in the night, but from questions of policy.

Sir D. MACLEAN: Very seldom.

Captain BOURNE: Does the right hon. Gentleman say that a big Bill going through the House, say, for local expenditure, education or housing, which results in Supplementary Estimates being required, is not a question of policy? The question is whether the House of Commons is going to agree to pass any Bills of kind which mean additional expenditure for the Exchequer, because it is obvious, if you have to find some £30,000,000 to £35,000,000—

Sir D. MACLEAN: If the hon. and gallant Member will allow me, he asked me about Supplementary Estimates. No Supplementary Estimate ever raises the question of a great Bill like the Education Bill, for instance, which is a matter always contemplated by the Government in their general policy. That has been my experience over a great many years, and I am surprised it is not the experience of the hon. and gallant Member who has sat in the Chair, and who will remember how constantly he has to check hon. Members when Supplementary Estimates are being considered, which, though affecting the question of policy, it is not open to the Committee
to decide. Sometimes questions of policy arise on Estimates, but relatively seldom.

Captain BOURNE: I agree it is relatively seldom that they arise, but it is just on those rather rare occasions that there is a Supplementary Estimate of any magnitude. For example, a Supplementary Estimate may come forward for the Ministry of Agriculture. There is no additional provision made for smallholders, but if that policy is to be carried into effect, a further Supplementary Estimate will be required, and a big one.

Sir D. MACLEAN: Not this year.

Captain BOURNE: We do not know. Those of us who sat on the Committee on that Bill were given to understand it was a question of urgency. However, I will leave the right hon. Gentleman to settle that with the Minister of Agriculture. Returning to the point I was making, it will be necessary for this Economy Committee to cut some £35,000,000 from existing Estimates before there is any saving on Supplementary Estimates. It seems to me that the Chancellor of the Exchequer is asking the House to refuse to pass any solitary Bill which will incur expenditure in the coming year, because it is obviously impossible to economise sufficiently both to make up for the sum he has raided this year and to find new money for any Services, however desirable.
I consider that the Chancellor has estimated unduly for Income Tax and for Death Duties, unless there is a revival in trade, because it has to be remembered that Death Duties are paid very largely on the market value of securities. A depression in trade means that these securities are worth less than they normally are, for there is the question of companies having to pass dividends. It is likely that any additional Estimate the right hon. Gentleman has made, owing to the fact that in this year he gets a full year's collection, will be more than wiped out owing to the depreciation of the securities on which these duties are levied.
Those seem to me to be the main criticisms of the Budget which one can advance. The Chancellor has made no attempt to meet the deficit by imposing taxation. He has merely postponed it on the ground that this is an emergency,
but this emergency has been going on for some time. Trade conditions have been getting worse and worse in the last 18 months or two years, and there is no prospect at the moment that we are anywhere near the end of the emergency. It does seem to me that to leave the matter over to another year, and put it off by methods which the right hon. Gentleman himself has condemned in round terms on previous occasions, is not an act of courage, and is not likely to restore the confidence which is necessary if industry is to revive. The speech of the right hon. Gentleman yesterday has revealed to the House how necessary it is that we should have a financial statement earlier in the year than we do at present. In the old days, when the Session began in February, the Financial Statement was made very shortly after the House reassembled, and long before the bigger questions of policy were considered. The House now meets in October or November, when it is free from any financial responsibility, the day of reckoning is far off, and the House is ready to embark on Measures without knowing how they are going to affect the national revenue. If we are to continue to meet well before Christmas, some method must be devised so that the House may be aware of the Bill which is to be incurred, and the liability which it is laying up before its life has run for six months.

Major NATHAN: Nobody who listened to the Chancellor's Budget statement yesterday could have failed to be relieved by it. I am not so sure whether those who, in the cold light of this morning, read the statement in the OFFICIAL REPORT felt precisely the same relief, yet I will say at once, as indeed the right hon. Member for North Cornwall (Sir D. Maclean) has already indicated, that we upon these benches give general support to the financial proposals of the Government, believing that this is, in fact, not the appropriate moment for adding to the burden of direct taxation. But if there is to be a delay, let us recognise the price we have to pay for the delay. The essence of this Budget is that it is a Budget which defers dealing with each one of the grave financial problems with which the country is confronted. Hon. Members in all quarters, even those who pin their faith to Pro-
tectionist measures, will agree that the United Kingdom has weathered the economic blizzard in a perfectly extraordinary manner which none could have prophesied had they been under the obligation of foreseeing the circumstances and calculating the needs of this time.
Let not the House or the country deceive itself into thinking that because for the moment we have succeeded in paying our way, there is any ground for complacency. The position, indeed, is very different. I will analyse certain of the statements appearing in the financial review given by the Chancellor yesterday, and I should like to hear from the Government representative in due course what explanation they have to give of my analysis, or whether they think I have misled myself in the figures I shall venture to submit. I take, first of all, the question of debt redemption. It seems to me there is very little cause for satisfaction there. In 1929–30, the nominal Sinking Fund payment of upwards of £47,000,000 was reduced by the Budget deficit to £25,500,000. In 1930–31, the Chancellor claims that the actual net sum applied to debt redemption was £52,500,000, but is that so? The fact is, I submit, that against the nominal Sinking Fund allocation of £66,830,000 there is, first of all, to he set the Budget deficit of £23,250,000. Further, there is the net borrowing for Unemployment Insurance Fund of a further £36,500,000. Then there is the item of £6,000,000, which I have not heard referred to in the Debate, but which represents the difference between the interest actually paid on saving certificates and the interest which had been reserved by the Chancellor of the Exchequer, according to the Budget statement last year. This sum of £6,000,000 has disappeared into the mists, and no mention has been made of it. Apart from the German mobilisation loan item of £9,000,000, the real debt reduction is not, as it seems to me, the figure given by the Chancellor of the Exchequer yesterday, namely, over £43,000,000, but a figure of rather over £1,000,000. It is, in fact, £1,170,000, increased to £10,170,000 by the addition of the £9,000,000 of the Young loan.
I turn to the revenue account. There is an ultimate balance budgeted for of £134,000, meagre enough in all con-
science, and that £134,000 will only be arrived at if there is an almost miraculous and entirely unexpected relation between the actual and the estimated revenue and the actual and the estimated expenditure. I have the gravest possible doubt as to whether the revenue will produce anything like the figure estimated, and I make allowance for forestalments in the past year under Customs and Excise, thus reducing the real drop in Customs and Excise to £1,500,000. The significant fact about the Chancellor of the Exchequer's estimate as regards Customs and Excise is that by recognising the likelihood of a drop he recognises the likelihood not of an increase or improvement in trade but of a decline in trade. That is perhaps the most significant item arising out of the financial statement. It indicates the view of the Chancellor of the Exchequer as to the probable course of trade in this country during the next 12 months.
If the Chancellor assumes a reduction, as he does, in trade and industry during the next 12 months is it not undue optimism to calculate that the return of Income Tax will only fall by four per cent.? The "Economist" a few weeks ago published an analysis of reports published during the three months January to March of some 519 public companies, and these reports showed a drop in profits of upwards of 10 per cent. If there is a drop in the profits of sample companies of that number amounting to 10.6 per cent., I find it difficult to follow how the Chancellor of the Exchequer estimates for a reduction in Income Tax returns of only 4 per cent.
There has also been undue optimism with regard to the calculation of Surtax. It is true that the Chancellor of the Exchequer has estimated for £1,000,000 less than at one time he anticipated would be produced by this tax having regard to the new rates which are applied this year over a whole year, but, although the Chancellor of the Exchequer explained to the Committee yesterday that the statutory income upon which Surtax is based may, prima facie, justify an estimate as high as that put forward for Surtax, I feel that the Chancellor of the Exchequer has overlooked the practical difficulty of collecting cash where often there is no cash. It is not the case that prospective payers of Surtax
set aside in the bank idle for a period of 18 months or two years the sum of money which they may have to find in Surtax. Usually they invest it, very often in industry, and those who have invested money in this way which would have been applied to Surtax have now in all too many cases lost their money and will not be in a position when the time comes to find it immediately. The Chancellor of the Exchequer has, I think, overlooked that practical consideration in his calculation.
I observe that the Chancellor of the Exchequer estimates £90,000,000 from Death Duties, which is an increase of £7,500,000 over the amount actually obtained last year. Although £4,000,000 of that £7,500,0000 is the amount which the Chancellor calculated as being the yield of the higher tax in the full year now current, he has added to it by a further £3,500,000, and I do not understand or follow the basis upon which Death Duties can be calculated at a time of falling prices, depression of industry, depreciation in the value of land, inability to sell pictures and so on—I am at a loss to understand how the Chancellor of the Exchequer estimates for so substantial an increase in a return which depends on the maintenance of values.
I estimate, as far as revenue is concerned, that the Chancellor of the Exchequer will be extraordinarily fortunate if he receives a return within £10,000,000 of the Budget estimate, but even if the revenue were to be realised—which for the reasons I have indicated I find it difficult to believe will be the case—I submit that the Debt programme is open to grave objections. The Sinking Fund is estimated normally at £52,050,000. It is necessary to deduct £20,000,000 from the New York Dollar Reserve. There is, I believe, an impression, an erroneous impression, in the Committee that this £20,000,000 part of the £33,000,000 represents accumulations from revenue. I draw the Committee's attention to the fact that on the 8th of April, 1930, there appeared before the Select Committee on Public Accounts, of which I believe the hon. Member for Farnham (Mr. A. M. Samuel) is chairman, Sir Richard Hopkins, who explained that this sum was borrowed on Ways and Means account, and he added significantly that:
The only question is whether it is desirable to wind this fund up and use it for tits cancellation of National Debt.
Far from using it for that purpose the Chancellor of the Exchequer has applied it to current revenue. The hon. and gallant Member for Oxford (Captain Bourne), like the hon. Member for Westmorland (Mr. Stanley), pointed out that no provision of any kind is made far any Supplementary Estimate or for expenditure which must necessarily follow from such Bills as the Education Bill and the Land (Utilisation) Bill should they ever reach the Statute Book. There is no provision of any kind in the Budget for any expenditure outside that which has already been covenanted for. There is only provision made for £30,000,000 in connection with the Unemployment. Insurance Fund, though Sir Richard Hopkins estimated that the sum needed would be an amount of £35,000,000 to £40,000,000 or even more. In these circumstances, unless there is retrenchment greater than one can foresee at the moment, there will be an excess of expenditure of at least £10,000,000 without making the slightest provision for any Supplementary Estimates or any expenditure involved by legislation. I add the £10,000,000 which I estimate as the minimum deficit on revenue to the £10,000,000, my estimate of the minimum overplus of expenditure, with the result that the net debt reduction is not £52,050,000, but it is reduced to £32,050,000, from which has to be deducted the £20,000,000 Dollar Reserve now being raided and £45,000,000 in respect of the overplus borrowing in respect of the Unemployment Insurance Fund. I take for the purpose Sir Richard Hopkins' middle figure of £45,000,000. Therefore it is not in my submission an exaggeration to say that the Chancellor of the Exchequer is budgeting not for any redemption of National Debt at all but for a naked deficiency of £33,000,000 or even more.
The Chancellor of the Exchequer claimed the credit for using our resources for stimulating trade but I do not think he attaches sufficient importance to the fact that the additional £10,000,000 which is to be paid in January instead of July next year will diminish the resources available for industry and for investment to exactly
the same extent as if additional Income Tax had been imposed to that amount and in truth and in fact the £10,000,000 to be paid in January represents for the limited class who are liable, professional men, doctors, solicitors, barristers and accountants the black coated workers and the like an additional Income Tax of 1s. 1½d. in the £, and it will have exactly the same effect as if the standard rate had been increased by that poundage.
It is worth noting that the amount it is proposed to raise by tax revenue is £697,000,000 or including the Road Fund £720,000,000 as against £704,000,000 last year. There is a difference of opinion as to the amount of the national income during last year. Some estimates have put it as high as £4,000,000,000 but the President of the Board of Trade has put it as low as £3,600,000,0000. I take the middle figure, £3,800,000,000, which gives the ratio of tax to revenue at 18.5 per cent. for last year. For the current year I estimate a reduction in the national income of £300,000,000 reducing it to £3,500,000,000 and with taxation at £720,000,000 it gives the ratio of tax to income at the very remarkable figure of 20.6 per cent., and this is without taking into account £167,000,000 paid by the taxpayer in local rates. If this amount is added to the tax burden it makes the ratio of taxes to national income just short of 25 per cent, or 5s. in the £.
The Chancellor of the Exchequer has claimed that this breathing space will give industry time to recuperate. But it is necessary that during this year of delay, this year's postponement of the burdens that are inevitable, industry should take the opportunity to reorganise itself, for, if it does not do so, the breathing space will become something very like a prolonged death rattle. The Chancellor of the Exchequer is counting upon all sorts of things to assist him through his difficulties. He is relying, as has been pointed out, on a trade revival. He is a bold man who at this stage prophesies a trade revival within the next six months sufficiently great to advantage the revenue to any substantial extent. The right hon. Gentleman is relying also upon a big conversion loan, and he was very emphatic yesterday on the subject of economy. I suggest that a trade revival to an extent sufficient
to affect the revenue is unlikely within the next two years. As to conversion, it is more or less out of the question unless and until the City is satisfied with regard to economies. The need for economy is imperative now.
There is, of course, Sir George May's Commission. We have had an example of the delays involved with Commissions in the case of Lord Macmillan's Commission, and Sir George May's Commission, however strenuously it may work, obviously cannot report for some months to come, and it will take some time longer for any recommendations that it may make to be carried into effect, and some of them may require legislation. I hope that some economies may be effected during the current year, but I am bound to say that I scarcely expect them. The Chancellor of the Exchequer said yesterday:
I am confidently expecting that, as the outcome of the recommendations of the Economy Committee.… considerable reductions of expenditure will be made during the year."—[OFFICIAL REPORT, 27th April, 1931; col. 1395, Vol. 251.]
But as the right hon. Member for Edgbaston (Mr. Chamberlain) pointed out today, the Chancellor of the Exchequer on 11th February last told the House—
I frankly tell the House I do not expect much from it. As a matter of fact I believe I could write its report to-morrow."—[OFFICIAL REPORT 11th February, 1931; col. 449, Vol. 248.]
I wish to know whether any, and if so what, economies have been achieved by the Chancellor of the Exchequer and are reflected in the Budget. I am far from wishing it to be thought that I question in any sense the keen and earnest desire of the Chancellor to ensure economies, or his sincerity in desiring to see that the work of Sir George May's Commission is carried into operation at the earliest possible moment. But the fact remains that it is the Government, and not the Chancellor of the Exchequer alone which is responsible for policy. What the Chancellor of the Exchequer did yesterday was to draw on the Cabinet a bill payable on the National Bank of Retrenchment. The question which this House and the country will ask during the coming weeks and months is—will it be accepted and will the acceptance be honoured?

Brigadier-General Sir HENRY CROFT: The Committee has listened with great interest to the speech of the hon. and gallant Gentleman who has just spoken. I must confess that nothing has surprised me more in these Debates than the complacency with which the Liberal party listened to the Chancellor's speech yesterday. For over two years Liberals have declared themselves to be the apostles of great schemes for the granting of employment to the people as the only means of restoring prosperity to the country. Yet the hon. and gallant Gentleman who has just spoken apparently agrees with what was said by the right hon. Member for Northern Cornwall (Sir D. Maclean), that the Liberal party give their general support to the Chancellor's Budget statement. Surely, the Budget statement of yesterday was the death knell of the hopes of the Liberal party regarding all their grandiose schemes. The Chancellor appeared to me absolutely to destroy the reasons for hope and expectancy—the reasons which Liberals gave for supporting the Government in the Vote of Censure only 10 days ago.
We have reached an extraordinary pass, because I really did believe that the Liberal party had one aim in life left, and that it was to promote schemes of employment. But it now appears that they have abandoned that aim and are prepared to accept the Chancellor's Budget speech. That speech appeared to me as lacking in imagination, as a speech which offered hope to no one. It was a Budget of despair. It contained no single thing for unemployment. It did not even contain a gesture to industry. It appeared to be a complete Budget of laissez faire carried to the extreme. The Chancellor declared yesterday that the Budget dealt with a deficit of £37,500,000, but we all know that if the deficit had been truthfully reflected it would have been more like £65,000,000 or £70,000,000. The Debate has been carried on as if the Chancellor's figures were correct. Everyone knows that the Budget has been achieved only by the complete abandonment by the Chancellor of all the old canons of finance upon which he has lectured this House year after year. It has been achieved by robbing next year's Budget. It has been achieved by a colossal raid on the Sinking Fund. It has been achieved by seizing a national
fund which is not income at all but really national capital. This has all come from a Chancellor who, we were always led to believe, was the greatest purist in finance and one of the few remaining guardians of the original ideas of Gladstonian finance.
I am sorry that the Chancellor is not here. I rejoice at his recovery of health, and am the more delighted that he is strong enough to deliver a broadcast address this evening. I wish he were here because I would have liked to have asked him a few questions. Perhaps the President of the Board of Trade will speak later and will give me the answers. How sad it is that the Chancellor of the Exchequer did not listen to the advice given to him by one whose views, I always understood, he shared! I refer to Professor Keynes. Had the right hon. Gentleman followed the advice of Professor Keynes he would not have found himself faced with this great difficulty. He would have been able, not only to raise new revenue which would have harmed no one and would have been of great benefit to the people of this country, but at the same time he would have been able to reduce taxation before the year was over. What did Professor Keynes say?
The main decision that seems to me to be forced upon any wise Chancellor of the Exchequer is the introduction of a substantial revenue tariff.
I hope it will be noted that this moderate suggestion of a revenue tariff did not come from this side, but from a leading light, in economics, of the Liberal party. I believe I am right in saying that Professor Keynes was joint author of "How we can Conquer Unemployment," and that when conquering was not going on as quickly as he had hoped, he wrote another pamphlet called, "It can be done." At any rate, it is satisfactory to know that that leading Liberal pundit, the man who taught all the hon. Members of the Liberal party their economics, has now come to the conclusion that we can conquer unemployment only with a tariff. Professor Keynes suggested that the way the Chancellor of the Exchequer could get out of his difficulties is by a revenue tariff of 15 per cent. on manufactured goods, and 5 per cent. on foodstuffs.
We are always grateful for these proposals when they come from the Liberal party. They really help us, and we can join with some of those outside the House when they chant, "We go marching on." Not only Professor Keynes, but within a week he was followed by Sir Josiah Stamp, who was the only other great intellectual economist left in the Liberal party. It was a great shock to Liberals to find that he, too, had gone completely round. Although Sir Josiah Stamp remains Free Trade in his ideas, he thinks that in the grave condition of this country something of this kind must be done. Not only do we find these great authorities following Mr. Reginald McKenna and all the other leaders in thought, but it must be evident that the vast majority of the Liberal electors of the country are thinking the same thing; otherwise we should not have found the extraordinary change in the electoral results at the last six by-elections, where there has been a reduction on the average of 6,000 votes in the Liberal poll.
I beg the Committee to remember that the speech we heard yesterday proved conclusively that we have come to the end of our tether. There has not been an optimistic speech delivered to-day, with the exception of that of the hon. Member for East Leicester (Mr. Wise), who was a very real optimist. I am not going to follow him in his reasoning that we are less taxed than other countries in Europe—a statement which is in direct contrast to that made last year by the Chancellor of the Exchequer, who said that we were the most heavily taxed country in Europe. The Chancellor of the Exchequer, apparently, in refusing to adopt the advice of the Liberal economists, tried to place us on the horns of a dilemma. He said that we cannot have revenue and have employment too. He said it was true that we might be able to raise £150,000,000 sterling, but we could not get revenue and employment at the same time. Our answer is that we can do it in exactly the same way as it has been done in the case of all the safeguarding or protected duties at present in operation.
You will find that there was more employment every year in every safeguarded industry, with perhaps the one exception of Nottingham lace. I know that the President of the Board of Trade and I have had some disagreement on that
question. At any rate the right hon. Gentleman knows now that the employment of those people in the lace trade has gone down enormously since the duties were removed, but that in every other industry we have seen more employment, and at the same time, while this miracle has been achieved, the Chancellor has been receiving something like £12,000,000 sterling in Customs revenue. Since we on this side have been directly challenged on the point, may I say that we do not limit ourselves necessarily to a revenue tariff, although we welcome the indications which are forthcoming of new allies in that connection. But I am confident that the vast majority of my friends here will agree, and also many hon. Members opposite—certainly the hon. anti gallant Member for Central Hull (Lieut.-Commander Kenworthy), who has recently become a keen champion of a revenue tariff, will not feel disposed to argue against this proposition—that within two years, if we have the courage to grapple with these difficulties, by adopting the policy which our party has indicated, we shall have fresh revenue and a saving in unemployment costs amounting to something like £130,000,000. If I am anything like correct in that view, no one can deny that the effect of such a policy would be electrical on every industry in the country.
There is one point which ought to be present in the minds of all. The tragedy of this Budget is the tragedy of the decline of our export trade. We know that our home trade is suffering greatly, but we have always looked to our export trade as the reinforcement of our home production. To-day, not only are we attacked at the heart of our trade, but our export trade is suffering greatly. There is hardly any Free Trader in this Committee who will deny that the one strong point which is left to the Free Traders, the one thing in which they really believe, is that if we try to look after the work, the wages, and the industry of our country by means of a tariff, we may affect our export trade. This consideration is germane to the discussion of our economic situation both this year and in the years to come, and I may be allowed to deal with it briefly. Our opponents say that a tariff which restricts imports must restrict exports. I answer by applying the acid test of the Free Traders themselves. If their contention be right, our exports
must have increased in recent years and those of our protected rivals must have decreased. It happens, however, that the Free Traders are utterly confounded by world experience, taken both over a long period and over a short period. Our protected rivals have only restricted those imports which they can make themselves, and their exports have increased so much more rapidly than ours, that anyone who looks dispassionately at the situation, must agree that they have practically left us standing still.
These are facts which I would beg of the Committee to remember because they are startling and they upset nearly all the theories which have been advanced from the laissez faire point of view in the House of Commons for the past 50 years. If we compare the exports of manufacturers from this country in 1930 with those in 1913, we find that those exports have increased by £13,000,000, but those of France have increased by £50,000,000, those of Germany by £114,000,000, and those of the United States by £248,000,000. These are figures which cannot be disputed. Taking the percentage increases, we find that our exports of manufactures have been practically stationary during that period, our increase being 3.1 per cent., whereas that of France is 29.7 per cent. Germany 34.9 per cent., and the United States 100.7 per cent. So much for the short period. What has happened in the long period since 1880 when it may be said that Free Trade was well-established in this country and Protection was well established on the Continent of Europe, and had been commenced in the United States. In 1880, Britain exported £16,000,000 worth more of manufactures than France. Germany and the United States put together. In 1913 we exported £325,000,000 worth less than those three countries put together, and, in 1930, £725,000,000 worth less than those three great competitors put together.
These facts, I submit, are overwhelming and ought to cause every man whose mind is not bigoted on this subject, to pause and think. From having been supreme as an exporting country, even up to 1913, we have now gone to third place among the exporting nations of the world and the two countries which have passed us so rapidly are our most highly protected rivals. The Chancellor of the Exchequer waved on one wide the
policy of a tariff and said that it would in effect mean a hidden Excise Duty upon the people of this country. But the evidence which the right hon. Gentleman has had before him in recent years, surely shows that there is no longer any ground for that argument. I am sure that the President of the Board of Trade will not deny that, whatever else may be said about the Safeguarding Duties, it cannot be claimed that the people have had to pay more for the safeguarded articles than they paid for those articles before the duties were imposed. It is now generally accepted that, thanks to mass production in those industries, there has been a considerable drop in the prices of such things as motor-cars, tyres, artificial silks, and wrapping paper—the duty on which is so foolishly to be removed in a week's time.
The right hon. Gentleman also said—I am not using his exact words—that the policy which we propose would mean giving money to the rich and exploiting the poor. My first answer is this. In every single one of the cases in which it is proposed to remove the shelter of a Safeguarding Duty the trade union leaders are supporting the demand for the retention of the Duty. I have here letters from trade union leaders and in cases where there are no trade unions concerned from the leaders of the workers in affected industries, urging me to try to enforce on the Government the fact that they are against the Government in this matter, and desire to see the livelihood of their fellow countrymen preserved. I am grateful to the Committee for allowing me to make these observations. I think it is becoming clear that the policy of the Government is found to lead to serious results. They see this nightmare of 2,500,000 unemployed in our midst, representing 7,000,000 or 8,000,000 people dependent upon what really amounts to national charity—and I do not use the term offensively. We have to grapple with this question but the Chancellor of the Exchequer has made no attempt to do so. He has offered no new suggestion but stood at that Box like Mr. Micauber, hoping that something was going to turn up.
I offer the right hon. Gentleman this warning that if his hopes are not fulfilled and if the depression continues or becomes worse, he is putting a burden
on his successor which is altogether wrong. In my opinion he is gambling with the finances of this country. The right hon. Gentleman at least did one good thing in his speech. If I may use the parlance of the ring "he got in a right and left" and shattered the hopes of the Liberal party. He dismissed all the schemes of the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George) and said that it could not be done. He also proved conclusively that the "Labour and the Nation" programme is impossible of fulfilment. He has told us that the country cannot stand another penny for these schemes and that the last straw of taxation has been found. At last the country may breathe again, thankful for knowing now that it is absolutely impossible while the present Chancellor of the Exchequer occupies his place for us to have Socialism in his time.

Mr. BENSON: I do not think that anything in the career of the Chancellor of the Exchequer proved his courage more conclusively than the Budget which he introduced yesterday. It is a stopgap Budget, and it adopts expedients which no one denounced more vigorously than the right hon. Gentleman himself when they were adopted in previous years. When the Chancellor made up that Budget he was perfectly well aware of the sneers which would be flung at him from the other side. He knew that he would be told that he was aping the right hon. Gentleman the Member for Epping (Mr. Churchill). But he was convinced that, owing to the psychological state of the country, it was necessary to avoid fresh taxation and he took one of the most courageous steps that a man of strong conviction can take—the step of going back upon his convictions. The right hon. Gentleman has received from hon. Members opposite those sneers which he knew must inevitably come. There has been some suggestion, however, that there is little or no difference between the action of the Chancellor of the Exchequer now, and the action of the right hon. Gentleman the Member for Epping when he was Chancellor of the Exchequer, and when he raided hen-roosts. But I suggest that the two situations are not at all comparable.
To-day we are faced with an industrial and commercial emergency. We are in the midst of a slump unparalleled in the
history of this country or of the world. Does anyone suggest that things which it would be wrong to do when trade is good and industry is expanding, must necessarily be wrong in the middle of an unparalleled slump? To take up such an attitude reduces commonsense to nonsense. There is no comparison between the situation, industrial and financial, in which the Chancellor of the Exchequer finds himself to-day and the situation which existed when the right hon. Gentleman the Member for Epping was Chancellor. It has been suggested that in 1926 the coal strike was an emergency comparable with the present industrial situation, but that is not true. The coal strike was an isolated incident in a period of good trade, and, anyone who examines the financial returns of the country will see that the effect of the coal strike on the country was very small. Apart from that consideration, does anyone suggest that the raids and the financial jugglery of the right hon. Gentleman the Member for Epping were limited to 1926? He had five Budgets and during that period we had expanding conditions and improving national income, but with one exception his Budgets show some form of hen-roost raiding or financial jugglery. The Chancellor of the Exchequer to-day has adopted unusual means to meet an unusual situation. The right hon. Gentleman the Member for Epping adopted those means as ordinary and usual methods of balancing his Budgets. That is the difference between the two.
8.0 p.m.
The hon. Member for East Aberdeen (Mr. Boothby) asked us what the Government were doing, and what the Chancellor was doing, to lift the world-wide slump I will tell him, or I would if he were in his place. We are maintaining the Free Trade tradition of this country, and that is the highest service that we can render to the improvement of world conditions. High tariffs and the steady growth of tariffs in other countries have been one of the greatest factors which have led to the present world-wide slump. If Great Britain were to depart from her Free Trade traditions, it would put back indefinitely the opportunity that will some day come of a steady and, I hope, large reduction of the tariffs of other countries. The hon. and gallant Member suggested that this Budget
proved the utter inadequacy of Free Trade. It proves nothing of the kind. It proves, on the contrary, that if we compare our Budget with the Budgets of other countries, Free Trade is by the far the most efficient and the soundest fiscal method that it is possible to adopt.
The right hon. Member for North Cornwall (Sir D. Maclean) called attention to the fact that whereas we had a surplus of income over expenditure of something like £43,000,000, in the United States they were estimating for a deficit of somewhere between £140,000,000 and £150,000,000. He might have gone further. I remember that the right hon. Member for Darwen (Sir H. Samuel), speaking on the subject of Free Trade and Protection, arranged the countries of the world according to the height of their tariff barriers and then according to the level of real wages in those countries, and he found this, I will not say remarkable, but very natural result, that the higher the tariffs in any country, the lower were the real wages.

Sir H. CROFT: Is it not a fact that in the United States, Canada, Australia, and New Zealand, the four highest protected countries, the real wages during the last decade have been the highest in the world?

Mr. BENSON: In the United States undoubtedly wages are higher than in this country, but then the hon. and gallant Gentleman must remember that the United States is a virgin country which is being exploited in an utterly extravagant manner. Take one instance alone. In the coal mines of this country we are working 2 feet 6 inch seams, but in the United States of America they are working 40 feet seams, and not just narrow workings either. Is it suggested that you can compare a country with such natural resources with any other country? We have seen what high tariffs have done for Australia, and they would do the same for this country if we adopted them.
I want now to adopt the method with regard to Budgets that the right hon. Member for Darwen adopted with regard to wages. If we take the United States, which is the highest taxed country in the world, we find that they heading for a deficit of something like £150,000,000. If we exclude the $440,000,000 debt re-
payment, that leaves a deficit of something like £60,000,000 or £70,000,000 on the current year. If we take another great industrial country with high tariffs, namely, Germany, we find that there is a deficit of £52,000,000; in France, there is a deficit of something over two milliards of francs, an equivalent of £16,000,000; in Italy, there is a deficit probably of somewhere between 1,000,000,000 and 2,000,000,000 lire, or somewhere between £12,000,000 and £20,000,000. If we come to a much lower tariff country than these, Japan, we find that as the tariff gets lower, the deficit gets lower and they have a deficit of only £5,000,000. When we come to the group of countries which have the lowest tariffs of all countries in the world, Belgium, Norway, Sweden and the Netherlands, countries which are almost Free Trade, we find that there are no deficits at all and that, on the contrary, they have surpluses. In our own country, which is Free Trade, we have a surplus of income over expenditure of something like £43,000,000.

Sir H. CROFT: Nothing like it.

Mr. BENSON: The hon. and gallant Member is thinking of the borrowing for the Unemployment Insurance Fund. I excluded debt repayments in the United States, and for the purposes of this comparison I am entitled to exclude unemployment insurance borrowing, for the reason that the United States have scarcely spent a penny upon insurance, and they are letting their people starve in the streets. If the United States had attempted to tackle their unemployment as we have tackled ours, their deficit would not be in the nature of £60,000,000, but probably £200,000,000 or £300,000,000.

Sir H. CROFT: Is it not a fact that unemployment was almost non-existent in the United States until just over a year ago, and that they were absorbing hundreds of thousands of emigrants every year, and that this deficit of ours in regard to unemployment has been going on for about 10 years?

Mr. BENSON: The hon. and gallant Member asks whether this enormous unemployment problem in the United States is not of quite recent standing. It is not. There are practically no figures of unemployment published in the United States. The only definite figures that I
know are the figures published by the American Federation of Labour, which is a great labour union that takes in all the skilled trades of the United States, and for over five years the American Federation of Labour has never shown less than 20 per cent. of its members unemployed, reaching back to 1926. The same thing applies to Germany, Australia and Canada; all these highly protected countries have had higher rates of unemployment than this country, but they have not made quite so much noise about it. The hon. and gallant Member smiles, but he can easily verify the figures if he wants to. At the present time, the United States have an unemployed army of something like 10,000,000. If tariffs are such a wonderful protection, if tariffs would do so much for this country, why have they not done it for the United States, with all their wonderful natural resources; why have not the United States managed to sail through this world depression without feeling it? If tariffs would rescue us from depression when we are in it, surely it ought to have prevented countries that adopted tariffs before from ever falling into it. On the contrary, the higher the tariff, the lower they have fallen in depression.
The hon. and gallant Member instanced Australia as one of the highest tariff countries in the world. Is he satisfied with the results of tariffs in Australia? I make him a present of all the comfort he can draw from it.

Sir H. CROFT: They have a Labour Government.

Mr. BENSON: If a Labour Government adopts tariffs, a Labour Government must expect to get what is coming to it. That is why we will not adopt tariffs. The mere fact that a Government calls itself Labour will not work miracles, and, if a Labour Government goes mad and adopts tariffs, it must expect such results. In Germany they have 5,000,000 unemployed, and so far as their export trade is concerned they have the stimulus—unpleasant, I admit—of reparations, which compels them to export a certain large amount of goods. Despite that fact, tariffs have not prevented them from having double the unemployment that we have in this country.

Sir H. CROFT: What is their population?

Mr. BENSON: It is about one and a half times that of this country, and they have double the unemployment, but their industrial population is not one and a half times ours. They have an enormous agricultural population, which at the moment does not suffer from fluctuations like an industrial population suffers. I am afraid the hon. and gallant Member gets little comfort for his tariff proposals in comparing us with any other industrial country. I would like to point out that whereas in the United States and in Germany unemployment is still mounting, in this country we seem to have turned the corner, and for the last eight weeks there has been quite an obvious drop in the figures of unemployment. That is happening in this country, and not in the tariff countries.
The hon. and gallant Gentleman was most—I use the word in a Pickwickian sense—disingenuous when he tried to draw conclusions from the effect of Safeguarding as applied in this country. What is the position of a safeguarded industry in this country? It is in the position practically of having its cake and eating it at the same time. Our great objection to Protection from a purely economic standpoint, is that it must inevitably raise prices and the cost of production, but a safeguarded industry that is getting the whole of its raw materials on a Free Trade basis has the advantage of a protected market at home and, at the same time, the advantage of being able to draw from the whole of the world for its raw materials and supplies. What possible parallel can be drawn between a safeguarded industry in a Free Trade country and the same industry when every one of its raw materials is taxed?
I am fully aware that other countries have been increasing their exports—for instance, France, Germany, Belgium, and the like—but how have they done it? How are they able to compete with Free Trade Britain? They are able to do it, because they have equalised their costs of production, and they have done that by cutting down wages. Real wages in France are not much more than half the rate of wages in this country, and it is because of the experience of foreign countries, because of the disastrous effect of tariffs upon wages, upon Budgets, and upon every walk of industrial life that
we in this party are going to remain staunchly Free Trade and thank the Chancellor of the Exchequer for another Free Trade Budget.

Mr. A. M. SAMUEL: I took a note or two of some observations which came from the hon. Member for Chesterfield (Mr. Benson). He opened by excusing the Budget by saying that we have been faced with an unparalleled slump. An unparalleled slump may excuse a shortage of revenue; it certainly does not justify an increased expenditure. A slump demands a reduction of expenditure, yet we have in the last two years been groaning under increases of expenditure, notwithstanding the persistent and widespread cry all over the country against the crushing burden of taxation. The hon. Gentleman, like myself, is a Member of the Public Accounts Committee. We are accustomed to deal with accounts, and I am positive that if a Budget such as that presented this year were submitted as the accounts of a private firm, they would not get an auditor's certificate. The Budget does not present a true picture of the national position as shown by the books of the Treasury.
We are groaning under taxation, and we know now to our sorrow that we were mislead by that section of the Colwyn Committee's report—section 451—which told us that direct taxation does not fall on the cost of production. We have found to our sorrow, and we see it in the misery of our unemployed, that this direct taxation does go on to production, and our goods are then too dear to sell at home in our own markets, or to enable us to retain old markets, and are often too dear to enable us to acquire new markets. If the hon. Gentleman doubts what I say, let him read that amazingly interesting report published during the last three or four weeks by the leaders of the cotton industry in Lancashire. He will then be perfectly convinced that the primary reason for the loss of a great portion of our eastern trade is that our goods are too dear.

Mr. BENSON: Did they state that the dearness of our goods was due to taxation?

Mr. SAMUEL: We know by experience now that the taxation goes on to the cost of the goods, and the logic of it is that
our goods are too dear for that reason. People forget that when goods are made they have to be sold, but if they are too dear they are not sold. Not a single item in this Budget will give relief to taxation or add to the ability of our manufacturers to produce more cheaply or to help us to increase trade and employment. Although it may be provocative to speak of wealth to hon. Gentlemen opposite, there is nothing in the Budget to help people to increase the wealth of the country. If hon. Gentlemen opposite say that they do not wish wealth to be increased, let me say this. For every person born here into this world, a certain amount of money, which I have computed at not less than £700, is required to bring him up from the cradle to the time when he works in the factory. For each birth you must add £700, perhaps £1,000, to the wealth of the country; otherwise, the amount of wealth of each person would be reduced because there would be a larger population and less wealth to go round.
Not only have we had an increase in this Budget, but the last Budget involved us in additional expenditure of £58,000,000. There were £33,000,000 more taxation, £23,000,000 deficit and we were run into debt for £36,000,000. To-day we are confronted with a set of figures which show that the revenue will be short of expenditure during the coming year, according to the right hon. Gentleman the Chancellor of the Exchequer, by £37,000,000. In my view, that is a false picture, and the true amount will more likely be £46,000,000.

Mr. SANDHAM: You have not got any relief.

Mr. SAMUEL: If the hon. Gentleman wants to make a speech, I shall be glad to sit down.

Mr. SANDHAM: Surely objections, when they are relevant, are allowed in this House?

The CHAIRMAN (Sir Robert Young): Interjections can be overdone.

Mr. SAMUEL: The taxpayer will be called upon to find £37,000,000 in order to make the revenue balance expenditure. I wonder sometimes how it is that the Liberal party can never divest itself of its age long inability to face unpleasant
facts. The right hon. Gentleman the Member for North Cornwall (Sir D. Maclean) spoke very pleasantly about the Budget but said in rather a solemn legal manner that the House of Commons must resume Parliamentary control of expenditure and when challenged whether he would vote against the increased expenditure he found it convenient not to give a reasoned answer. I have a paragraph which I cut out from the "Times" of 15th April in which the Leader of the Liberal party, Lord Grey, a man who is held in great respect by us all, is reported to have said:
At the moment, when the Labour Chancellor of the Exchequer is putting his foot down on further increases of expenditure"—
and so on. Where is the Labour Chancellor of the Exchequer putting his foot down on increased expenditure? Why does not the Liberal Leader face up to the unpleasant fact that the Labour party is not putting its fool down on expenditure, but that this Budget increases expenditure? The Liberal party is now, for all intents and purposes, part of the Labour party, which would not be sitting opposite there were it not for the unbroken support of the majority of the Liberal party. They are now practising the same inability to face unpleasant facts as they did in 1908; when everyone told them that the Germans would eventually attack us, they persisted in calling the German tiger a pussy-cat. When they found that it was not a pussycat, no one was more surprised than the Liberal party. They are martyrs to the pleasures of self-deception. Here we see again the Liberals deliberately refusing to face the unpleasant fact that the Labour party can only have one policy—a policy of increased expenditure, taxation and borrowing.
The Financial Secretary, who has had ample opportunity for the reading of history, will remember that the main policy of the Eastern Roman Empire, directly they got power over others, was to tax. That was the policy of Justinian. When he overthrew the Gothic power in Italy, his first act was to put the thumbscrew of the Logothete on the people. That is exactly what the Labour party is doing now. It is squeezing the very life out of the British people by taxation. It is the Byzantine Angaria once more. Forced labour by taxation. The hon. and
gallant Member for North-East Bethnal Green (Major Nathan) gave us an interesting picture of the amount of taxation raised in comparison with the amount of the national income. I thought it was a very just comparison. He said we have an income of between £3,600,000,000 and £4,000,000,000 a year, and that our taxes amount to £800,000,000 a year and our rates to something less than £200,000,000. For the purposes of argument I will call it, in round figures, an expenditure on rates and taxes of £1,000,000,000 a year against an income of £4,000,000,000. I will present that statement in another way to show bow we have got back to the old Justinian thumbscrew tax-system, the corvee. Every man is now working three months out of every year, under the rack, for the tax gatherer. By the reduction of armaments we are pleased to see we have reduced the number of our soldiers to 140,000. Do hon. Gentlemen realise that, according to a White Paper published by the Financial Secretary, the staffs, under the Treasury, who collect the revenue, number 34,000? We have one tax-gatherer for every four soldiers wearing His Majesty's uniform. If the Land Tax proposals are adopted we shall have a further number of officials; instead of 34,000 we shall probably have 44,000 tax-gatherers, as compared with 140,000 soldiers. It is reducing free government to a farce. We are conscripts of the tax-gatherer.

Mr. KIRKWOOD: Could we not have the soldiers doing that job? They would be doing something useful.

Mr. SAMUEL: Of the £37,000,000 deficit in 1931–32 which has to be met by the Chancellor of the Exchequer the first £20,000,000 is to be found out of what we know as the Dollar Exchange Reserve. I think it is a very wrong thing to take that money for such a purpose. It is a capital asset belong to the nation which is being applied to meet current expenditure. As someone picturesquely described the position yesterday, it is like a man getting into debt and then going to the mantelpiece and breaking open the small safe containing the child's threepenny bits with which to pay for his extravagance. The dollar reserve is kept as a precaution for emergencies. There are two objections to taking this money from the dollar exchange reserve. Supposing
I had had to give a decision as to the way in which that money should be used. I see in the Financial Statement No. 90 an entry of 136,000,000 dollars 5½ per cent. 20-year Bonds, a sum equivalent to about £28,000,000. Paying interest on internal debt does not do a tithe of the harm which arises from having to pay interest on an external debt. The interest on the external debt goes out of the country, whereas the interest on the debt held by our own people just passes from one city to another, circulating among the people at home. In addition to the American debt of £903,000,000 or $4,400,000,000 we have this 136,000,000 dollars worth of hoods falling due in 1936–37. In amount they are about equal to the Dollar Exchange Reserve. If that reserve had to be made use of, the thing to have done would have been to pay off that portion of the external debt, so relieving the taxpayers.
There is a further danger attached to the dispersal of that Dollar Exchange Reserve. That money was put into America for the purpose of enabling the British people to meet their obligations with punctual payments in dollars as the interest on the debt which we owe to America became due. Britain has never failed to meet her debt engagements on the proper date, and it was thought better to keep that money over there in case we should ever be "caught short." Under the proposal of the Chancellor of the Exchequer we shall part with £20,000,000 of that reserve and rely upon the Bank for International Settlements, in Geneva, to find us the dollar exchange we shall require each half-year in order to pay America. Suppose by any chance a disaster happened to Germany, and she could not, as she does now, pay into the Bank for International Settlements the dollar equivalent of the annuities which she has agreed to pay to our credit. Instead of our receiving sterling as we do now, and turning that sterling into dollars, we will in future use dollars from Germany to send to America; and if for any reason the Bank for International Settlements is unable to provide us with the dollars, we should be in the position of having to take the risk of buying exchange at any price the market liked to demand. It is all very well to say that the Bank for International Settlements can find us the
dollar exchange when we want it, but we are not positively safeguarded against a breakdown of any such arrangement.
It must have been a very bitter pill to the Chancellor of the Exchequer to have to eat every word he said last year about what my right hon. Friend did when he was Chancellor of the Exchequer. If we had done about the balance £9,500,000 which ought to be paid off the back deficit—the unpaid portion of the £14,500,000 deficit—what he has done, if we had suggested shirking our undertaking as he has shirked his own pretentious undertaking, he would have screamed the roof off in denunciation. He would have been very bitter about it.

Mr. SANDHAM: Quite right, too!

Mr. SAMUEL: But the right hon. Gentleman is now doing the very thing which the hon. Member would wish him to denounce. That is an indication of the relevance of his interruption. That money is now being paid by the proceeds of the capitalised annuities of the German Government to us, which were issued here and called the 5½ per cent. German Reparations Loan, 1930. Over and over again I put questions to the Chancellor of the Exchequer as to what he was going to do with the £9,500,000 he received as the British share of the Reparations Loan. He told me, in answer to a question, that he was going to use that money to buy 5 per cent. War Loan, and that it would be used to repay debt outside the Sinking Fund. I will not say for certain. But I am rather inclined to think that is what he told me. At the time I got a copy of Treasury Minute 3617 of June, 1930—I have to-day obtained another copy—and it says:
The Chancellor of the Exchequer draws the attention of the hoard to the issue of German Government International Five and a-half per cent. Sterling Bonds, 1930, being a portion of the German Government International Five and a-half per cent. Loan, 1930. The Chancellor of the Exchequer recommends to the board that the sum which represents the capitalisation of Great Britain's share in the unconditional annuities payable by Germany … shall be paid as and when received to the National Debt Commissioners to be applied by those commissioners to the cancellation of the long-term debt.
There is not the slightest indication there, nor do I think that at the time the Chancellor
had the intention, of using the capitalised value of those annuities to allow him to shirk his self-imposed task of paying off the £9,500,000 of the back deficit. The White Paper is dated June, 1930, not long after his Budget vows about Budget deficits. Probably he has changed his mind since his Budget speech and used the German annuity money instead of revenue raised by the Budget. In doing this he has taken away £9,000,000 from the calculation of the amount he has to raise this year. If the right hon. Gentleman had adopted honest accounting he would have added that amount to his £37,000,000 and then his shortage of revenue to meet expenditure would be not £37,000,000 but over £46,000,000.
The hon. and gallant Member for North-East Bethnal Green (Major Nathan) made an interesting calculation as to the amount of Debt actually paid off. I will go further than he went, and I will give the figure showing that the amount really paid off during the past year has been no more than £4,000,000. It appears from the Blue Paper that the amount of Debt repaid is £66,000,000, but, as we have had to borrow £23,000,000 to make that payment, the reduction is really £43,000,000. Then you have to take away the £36,500,000 which the Treasury have borrowed in order to make up what was necessary for the Unemployment Fund, and that reduces the amount to under £7,000,000. But I think the amount of £11,400,000 saved on Treasury bills or other types of national Debt interest is not accounted for solely by the fall in the rate of interest on the floating Debt. I am of opinion that there is an ingredient to be taken into account in that fall which arises from uncashed interest on National Savings Certificates which I put at £3,000,000 and earmark it for future payment. When you take £3,000,000 off the £7,000,000, the real amount paid off last year is £4,000,000 and no more, and not the £43,500,000 shown on page 15 of the Blue Financial Statement. We have to realise that this policy, which is backed up by the Liberal party, does not tend to economy, and there does not seem to be the slightest intention of reducing expenditure in the future.
The policy of the Government is definitely to tax and redistribute wealth. The hon. Member for East Leicester said that we can well afford to spend all the
money we desire, and that our national income is so great that increased expenditure does not matter. The net result of that policy is seen in the sad figures of unemployment insurance. No country can afford to go on spending in this way. Taxation is bad enough because you feel the operation and know what it means, but if on the top of taxation you continue to borrow, you soon get to a serious state of difficulty. You see the whole position in microcosm in the facts and circumstances existing in Australia to-day. In Australia they have an economic breakdown; and who has suffered most? Why, poor not rich people. That breakdown has mainly been brought about by Australia being no longer able to live upon her policy of borrowing. The time arrived when she could borrow no longer. Luckily in this country we have oversea investments which we can use to prevent a breakdown occurring. But not if we go on borrowing as we have been doing during the last few years. The £37,000,000 expenditure for unemployment then a further £36,500,000 of borrowing—I am taking the Treasury Minute—and this year the expenditure for unemployment may easily become a figure somewhere in the neighbourhood of £45,000,000 to he raised by taxation, and we shall probably have to borrow something in the neighbourhood of £50,000,000. That cannot be permitted to go on. I notice in the Budget Speech that the Government now set about borrowing on everything. They are now about to borrow on the security of the Road Fund.
I would like to refer hon. Members to page 15 of the Blue Paper. I draw attention to this fact, because I think the Financial Secretary has before now prided himself on the fact that the price of Government stocks has improved during the year. He takes credit for the Government that its stocks have gone up. Surely that is evidence of economic national weakness. It is true that money can now be borrowed by the Government more cheaply, and it is true that money is saved in the country. But instead of people having confidence enough to put their money into British industrial, Indian, Australian loans and British railway and other stocks, they dare not do so. People are not investing their money in Indian Government securities
and railway securities, which used to be considered first-class securities. Their confidence about Indian investments has been shaken by the political condition of India. People will not invest in the senior stocks of a trustee type in British railways, or in Australian loans because their confidence has been shaken. Investors have been driven out of those stocks and driven into British Government stocks, and that is what has put up the price of Government stocks. The Financial Secretary said: "Look how well we have done; we have put up the price of Government stocks." The reason why Government stocks have gone up is that investors have not been investing their money in these earlier favourites or in British industry. The Financial Secretary must not claim that anything done on the part of the Government is the cause of the rise which has taken place in British Government stocks.
The hon. Member for East Leicester talks about industrial securities, and he states that the Lancashire Cotton Corporation are asking for money to be invested in the cotton industry. It is true that there is money waiting to be invested and that the bank interest is low, but why are people not putting their money into this cotton undertaking? It is because they are frightened, and there is no confidence. These people are shocked at the inability of our manufacturers to produce to compete. There is no doubt that high costs have been the trouble in Lancashire, and this is shown in the report of the mission to the East. Their report says that our cotton goods are too dear. People who have a few hundred pounds will not invest in the Lancashire cotton debentures, because the mission, consisting of responsible men, have come back from the East, and they tell us that the main reason why we cannot sell cotton goods abroad Is that they are too dear. And so it goes on through most other trades. People have no desire to put their money into trade; they will not take the risk of loss. The Financial Secretary must get out of his mind that he has any right to boast about the price of Government stocks going up. The real reason for that is that people have lost confidence in other investments oversea and dare not venture in home trade. So they crowd into Government securities and
the price goes up. They even have not confidence to put their money into that cotton undertaking, although it is sponsored by the Bank of England and other great authorities in the financial world. They will not invest even in so first-class a security as that. The Financial Secretary has no right to boast about the price of Government stocks going up. It is an unsatisfactory development when people dare not put their money into home trades because they are frightened of this Government and what it is going to do.
My hon. and gallant Friend the Member for Bournemouth (Sir H. Croft) made some interesting observations about our oversea trade, and I want to draw from the figures which he mentioned a deduction he did not touch upon, which may enable the Financial Secretary to make a reply upon the figures. It is a very distressing conclusion at which I have arrived. I am not going to give detailed figures. All our imports last year exceeded all our exports, visible and invisible—the latter including shipping freights, banking profits and so on—by about £191,000,000. We were not able to pay for all our imports with all our exports by £191,000,000, and we had to fall back upon the interest on our over-sea investments—the investments of our fathers and grandfathers—in order to find enough to pay that £191,000,000. We have £4,000,000,000 invested abroad, and the Board of Trade returns published last February showed that £235,000,000 was due and payable to us in annual interest. Instead of our finding, as has always been said to be the case, that every import that comes to this country has a label round its neck drawing an export, we now find that that is not quite the case. We have to pay for our excess of £191,000,000 of imports by drawing upon the £235,000,000 of interest on our foreign investments. That has left us with an oversea credit balance in 1930 of roughly £44,000,000. That reduced figure is a disturbing thing to contemplate, because it has fallen from £131,000,000 in 1929 to £44,000,000 in 1930. It is not a good thing for this country, when it has to pay for its imports, not by what it produces, not by its services, but by drawing upon the
interest due to it—by surrendering dividend warrants, pieces of paper sent through the post, each representing merely currency and employing no men or women and giving us no help in our trade.
Let us take that a little further. Our oversea credit balance has dropped from £131,000,000 to £44,000,000 this year. Let it drop another £100,000,000, and you will get a minus figure of £56,000,000. What will happen then? The Financial Secretary knows very well what will happen. Where is our exchange going? The exchange will fall, and we shall have to do what the economists call "bleed gold." We have £150,000,000 worth of gold, so we can stand that for three years. When that is gone, what are we to do? With a national debit oversea balance, every time we try not to bleed the gold, the exchange value of sterling falls, and, when the exchange value of sterling falls, food, goods and raw materials bought from outside cost more, and so our goods become dearer in the markets of the world and more difficult to sell. We therefore have to send our gold to pay our debit balances as long as the gold lasts. What happens then I We have to part with our securities as we did during the War. Otherwise, we must starve. When we have parted with our securities, our unemployment figures will not be 2,600,000, but 26,000,000—half the population will be starving. That is the position to which we are getting as our oversea credit balance falls towards zero—or below to a debit balance.
I hold that the heavy taxation is one of the reasons which lead to extra cost of our goods so that we cannot sell them to pay for imports. It brings us to the point where we now are, with only £44,000,000 on the credit side of our trade balance. If the heavy pressure on the cost of production is not due to taxation there must be some other cause, and it must be identified, so that we may not be put in the position which I have just ventured to outline. The hon. Member for East Leicester (Mr. Wise) seemed to attach considerable importance to what he called the shortage of gold. I have seen that old idea dressed up again
during the last few months, putting upon the shortage of gold the cause of our miseries. I know that there is a disequilibrium of gold, but will the hon. Gentleman tell me in what countries there is a shortage of gold? When people talk about gold, they do not mean gold as a commodity, but gold as a basis of credit. In this country, one ounce of standard gold, worth 77s. 9d., creates in the British banks about £80 of credit. The low bank rates—3 per cent. here, 2 per cent. in France, 2 per cent. in the United States, and 2 or 2½ per cent. in Switzerland, Belgium or Holland—show that there is no shortage of credit, and that there is adequate gold upon which to base that credit. To what countries lacking gold or credit, therefore, are the existing stocks of gold to be lent or sent to provide bases of credit? What right have people to say that the existing stocks of gold are not sufficient in honest countries to provide the credit which is needed?
Who are the honest nations, who are the honest people, who are denied credit and prevented from buying or selling merchandise because there is a dearth of credit No honest nation or honest man with a credit-worthy record or a credit worthy proposal will fail to get as much credit based on gold as he needs, either in the United States, in Great Britain, in France, Belgium, Switzerland or Holland—the six great capitalist countries. The trouble is that people who have primary products, whether agricultural or mineral, to sell, now find that they have to give two or three times the amount of their productions for a manufactured article if they want to buy it here than was necessary before the War. They cannot buy, and, consequently, our manufacturers cannot sell to them, and, in turn, cannot buy their raw materials. Factories are closed down because they cannot sell; more raw material is not bought of the primary producers, and they are put out of work. Those countries that wish to buy of us such as Russia, Germany, the Balkans, Mexico, China or some States in South America—why cannot they buy here? Because they have no credit; they are not credit-worthy. If the hon. Member for East Leicester makes the point that the shortage of gold prevents them from
buying, are you going to give them the gold which you will not lend them? They have defaulted in the past, and it is a very poor type of export trade to lend money with which to buy goods, to people who do not repay you. That is no policy at all.
It is not shortage of gold which is upsetting trade with Germany. That is the same in the case of Russia. Germany and Russia have broken their own credit. Take the case of Germany. Up to the time of the Hitler election, her credit had gradually rehabilitated itself. If she came into the market and bought raw materials and base metals, prices would rise, and that would do good to the general price level of raw materials and base metals. She is a great user of them. But it is not the question of gold that prevents her from buying these raw materials or base metals. The reason she cannot buy them is this. The threat of Herr Hitler to repudiate shook the faith of those who are lending money to Germany. She bought goods and raw materials with the credit. It is not a shortage of gold that is to blame but the fear that if people, lend money to Germany, it will be repudiated. Take Russia. I will touch on it lightly and say nothing to which anyone can take exception. Russia could take thousands of millions of pounds' worth of goods from every nation. She has no money to buy them with and she would like to buy on credit. She is trying to buy, and on credit, and we guarantee her bills under export credits. It is not gold that has prevented the world sending Russia thousands of millions of pounds' worth of goods; it is that she has wrecked her own credit. There is a maldistribution, it is true, but there is no shortage of gold. The trouble is that so many countries that desire goods of us are uncreditworthy and, until they can prove themselves worthy of having credit lent to them, they will not be able to obtain goods and, consequently, our people remain out of work. That is a fair answer to the accusation made against gold by the hon. Member for East Leicester. They do an ill service to those out of work who lay the blame upon a shortage of gold. Rather let them find means of making the price of manufactured goods lower and of inducing would-be buyers to prove themselves creditworthy.
9.0 p.m.
The position of the Budget seems to me to be this. The hon. Gentleman opposite and his colleagues have left us to straighten out the mischief they have made. I am certain the Chancellor has overestimated his revenue and probably under-estimated his expenditure. It is a dishonest Budget, which would never get an auditor's certificate, and I pity the man this time next year who has to mop up the mess the Government have made.

The FINANCIAL SECRETARY to the TREASURY (Mr. Pethick-Lawrence): Yesterday we had the bouquets. To-day we have descended into the arena of party warfare. I hope, however, I may be permitted so far to return to the atmosphere of yesterday as to express my pleasure at the return of my right hon. Friend with his accustomed vigour, and also at the cordial reception which he was given in every quarter of the House. The Debate has covered, as is usual and quite proper, a very wide range of topics. This has made it exceedingly interesting to me, but has also made it difficult to attempt to deal with more than a selection of the points that have been brought forward. It is the duty of His Majesty's Opposition to oppose, and I must compliment them on the manful way in which they have endeavoured to fill the role allotted to them, but on the main budgetary proposals, with the exception perhaps of the hon. Gentleman who has just spoken, it seems to me that there is almost a unanimous opinion, and I think outside this Chamber they express it by saying that this is a jolly good Budget. The note was struck by the right hon. Gentleman the Member for Edgbaston (Mr. Chamberlain), who opened his remarks by saying everyone would be pleased with it except the Independent Labour party and, in saying that, he was following one of the Conservative newspapers which I read this morning. The "Daily Telegraph" in its leading article uses these words:
Mr. Snowden's third Budget is, within the limitations imposed on him by his Free Trade principles, an eminently sensible piece of work.
If I turn to the Liberal benches, the right hon. Gentleman the Member for Northern Cornwall (Sir D. Maclean)
conveyed his felicitations to my right hon. Friend for many points in his proposals, and particularly for the firm stand that he was making against the insidious evils of Protection. Some attempts have been made, particularly by the hon. Member for Westmorland (Mr. O. Stanley) and the hon. and gallant Gentleman the Member for Oxford (Captain Bourne), to call in question the Budget estimate of receipts. These estimates, I believe, will stand the test of full examination. Of course, I am prepared to admit that they are not based on the assumption that the depression with which we are now faced is going to remain for the whole 12 months. I do not think it is unreasonable to suppose that the difficulties with which we are faced have touched bottom and that, before the 12 months are out, an improvement will take place and will manifest itself in terms above the worst that might otherwise have been expected.

Sir GEORGE PENNY: Are there any indications of it?

Mr. PETHICK-LAWRENCE: I think there are, and it is only reasonable that the Budget Estimate should be based on some such assumption.
My hon. and gallant Friend the Member for Central Hull (Lieut.-Commander Kenworthy) asked me certain specific questions relating to the Petrol Duty. He knows that my right hon. Friend has considerable sympathy, which he has expressed before, with the difficulty with which some of the hon. and gallant Gentleman's friends are concerned, but, unfortunately, the financial position of the country and of the Exchequer is such that the very considerable loss of revenue which would be involved by the concessions for which he asks make it impossible to grant those concessions. If all road users were excluded, a Bum of something like £1,750,000 would be lost to the revenue.

Lieut.-Commander KENWORTHY: Road users?

Mr. PETHICK-LAWRENCE: If all users of petrol other than road users were excluded, there would be a loss to the revenue of something like £1,750,000. My hon. and gallant Friend will, no doubt, put the matter down for the Committee
stage of the Finance Bill, but I can hold out no hope that in this year the concessions for which he asks can be made.

Lieut.-Commander KENWORTHY: Will the hon. Gentleman elucidate that for a moment? When he talks about people who are not road users, is he thinking of people who use petrol for fixed engines? What we want is an exemption for petrol used for manufacturing purposes and not for driving any kind of engine.

Mr. PETHICK-LAWRENCE: If all other than road users were excluded, the loss would be about £1,750,000. Even if it were confined to certain specific users of petrol, the loss would still be very considerable, and I am afraid I cannot hold out any hopes that my right hon. Friend will be able to make the concessions for which my hon. and gallant Friend asks.

Lieut.-Commander KENWORTHY: rose—

Mr. PETHICK-LAWRENCE: I do not want to be discourteous. I have dealt with the thing on its larger side. I have said my hon. and gallant Friend can put the question down on the Committee stage, and these points will be dealt with, but he must not expect any concessions, owing to the difficulties of the present financial position. The hon. Member for East Aberdeen (Mr. Boothby) referred to the effect of the gold situation and rightly reminded me of the interest which I have always taken in this question. I would remind him in return that it was the Chancellor of the Exchequer of his party with whom he was more particularly associated, who really consolidated the position out of which the difficulty arose and continues to exist. He not only restored the gold standard in 1925, but he limited the currency issue in the year 1928, and those actions were, as I said at the time, irreversible, and it was because of those actions that the difficulty in this particular matter exists at the present time. I think that with regard to the question which he put to me upon the matter, my hon. Friend the Member for East Leicester (Mr. Wise) answered him very effectively. The hon. Member for East Aberdeen was asking the Government to take action which under the present constitution of the financial authorities of this country is mainly out-
side the province of the Government, and, as my hon. Friend the Member for East Leicester said, I do not suppose that the hon. Member for East Aberdeen would support a proposal to alter fundamentally the basis of the financial system of this country.

Mr. BOOTHBY: Is it not a fact that the Treasury and the Bank of England have worked, and are working, in the very closest co-operation, and is it really necessary to make this very apparent differentiation?

Mr. PETHICK-LAWRENCE: I think that the hon. Member distinctly said he did not want to know what the Bank of England would do, but what the Government would do, and the point is quite relevant to the criticism he made. Apart from that point, the Government have been responsible for action of a most important and valuable character. It has already been announced to the House that there have been conversations between the French Treasury and the British Treasury with regard to this very question of gold, and those Members who have followed carefully the reactions and the gold figures and the exchanges before and after our conversations will have noticed very considerable differences, and I have no hesitation whatever in saying that the conversations which took place proved of very great value to ourselves and to the French in this important matter.
The hon. Member for East Aberdeen also referred to the question of the publication of the Macmillan Report. I dealt with that matter very fully the other night. I do not know whether the hon. Member for East Aberdeen read the Debate which took place on the Adjournment a few nights ago, but I pointed out on that occasion, and I will repeat it for his benefit and that of other Members of the Committee, that it was a mistake to assume that the Macmillan Committee have in any sense been dilatory or slow in working on this matter. They have held 70 full meetings of the Committee and they have been for a long time past actively engaged on the report and in almost daily consultation with regard to producing it. I would not like it to go out that it was felt by some Members of this House that there was any unnecessary delay on the part of that Committee of very eminent men in working
to give the benefit of their knowledge and experience to the House at the very earliest possible opportunity.

Mr. BOOTHBY: When are they going to report?

Mr. PETHICK-LAWRENCE: I do not know yet. I said the other night that it was quite impossible for me obviously to say how soon the Report will be available. The hon. Member for East Leicester made several points to which I feel I ought to refer. In the first place, he contended that deflation was actually being pursued by the Treasury at the present time, and that it was partly responsible for the difficulties through which we are passing. It may be true that in years gone by the financial authorities, possibly with the connivance of the Treasury, have pursued a policy of deflation, but it is not true to-day. It is quite unfounded to suggest that the difficulties through which this country, in common with other parts of the world, is passing are due to any policy of that kind employed in this country. He further went on to suggest that the Government ought to raise public resources to take over some of the depressed industries at the present time. Quite apart from the political possibilities in this House, my Socialist principles are entirely repugnant to the Government raising public sums to take over industries at prices above the economic prices which private enterprise is willing to pay. It would he injurious to the principles which he and I hold that an unduly inflated price should be paid for industries which are in great difficulty at the present time.
He went on to quote from a pamphlet which the Chancellor of the Exchequer wrote in 1907 with regard to social reform and professed to contrast his attitude to-day with the attitude he took up then when he referred to the Budget being the means, through taxation and social reform, of benefitting the poorer section of the people. I think that my hon. Friend, who has not returned to the Floor of the House, and his friends—they are all absent—have forgotten the facts when they make that charge. If they will turn to page 8 of the White Paper dealing with the financial statement of the year, they will find that what is actually being spent out of the
Exchequer for the purposes of social services, exclusive of War pensions, is £100,000,000, and that this includes £45,000,000 for unemployment. That is exactly the kind of thing to which the Chancellor of the Exchequer was referring in the pamphlet which he wrote in 1907. The money is being raised by taxation and is being devoted to social reform, of which the alleviation of unemployment is a most essential item. In the past, when the Chancellor of the Exchequer wrote the pamphlet, unemployment was regarded as a thing entirely for the employers and workpeople to which this House should pay no attention at all. When a Member who used to lead the Labour party, and whose name we all honour, Mr. Keir Hardie, first came into this House and raised the question of unemployment on the Floor of the House, he was laughed out of court by the Members of the opposite parties. When the hon. Member for East Leicester twits the Chancellor of the Exchequer with being false to his views of 1907, he is saying something which is entirely outside the facts.
I would add this, and it applies not only to the speech of my hon. Friend, but to a great deal of the remarks which often fall from the back bench behind me. I can explain the position by a metaphor. When a Channel swimmer starts out across the Channel he swims for part of the time with the tide and makes very good progress. After a while the tide turns and he continues to swim but with all his efforts he very often fails to do much more than keep his position stationary. That is something like what we are doing at the present time in the situation in this country. Owing to the very large sums of money which have to be found for unemployment, it is exceedingly difficult for my right hon. Friend to widen in other ways the amount of expenditure in projects of social reform. My hon. Friends who sit behind me on the back bench are like the passengers in the steamer which accompanies the Channel swimmer. Instead of applauding the heroic efforts of the swimmer who is struggling against being driven back by the tide, they jeer at him for not making progress, regardless of the fact that hut for his efforts he would have been driven a long way further back. We know what the policy
of hon. and right hon. Members opposite would be if they were the Government. Instead of swimming against the tide of difficulties which the financial situation brings about, they would turn round and swim back.
The hon. and gallant Member for Bournemouth (Sir H. Croft), whose speech I am sorry that I did not hear, made, I am told, one of his characteristic speeches, in which he advocated full-blooded Protection. He was answered in advance by the speech of the right hon. Member for North Cornwall, who pointed out that in countries where Protection prevails they have not the Eldorado which hon. Members so frequently depict. On the contrary, the conditions in Protectionist countries are worse in many respects than they are here. He was also very effectively answered by my hon. Friend the Member for Chesterfield (Mr. Benson). I come now to the speech of the hon. Member for Farnham (Mr. A. M. Samuel). He covered a vast field, and I hope the Committee will excuse me from following him into all the ramifications of his address. I think it boiled down to this, that we are suffering from trade depression. That is no new fact. The consequences of that trade depression are very unfortunate, and they are equally unfortunate in other countries as well as our own.

Mr. REMER: Who caused it?

Mr. PETHICK-LAWRENCE: It certainly was not caused by the present Government. The hon. Member for Macclesfield (Mr. Remer) appears to think that the trade depression which has encircled the whole world, including the United States, Germany, the Eastern countries of Europe and the Far East arises because in this country we have a Labour Government. I welcome the suggestion of the hon. Member with regard to the potency of this country to settle the destinies of the world. There was one part of the speech of the hon. Member for Farnham which was more germane to the subject of our discussion today. He spoke of the £20,000,000 which the Chancellor of the Exchequer is taking from the Exchange Fund, and said that it was like a man going to the mantle-piece and taking his child's money-box to pay his debts. If he had said that it was like a man going to his own money-
box in order to pay his debts, I think the simile would have been apt, and that in the circumstances it would be the most natural thing to do. This question will no doubt be referred to again by the Chancellor of the Exchequer, but I would say this, that the right hon. Member for Edgbaston heartily approves of the decision of my right hon. Friend. Finally, the hon. Member for Farnham seemed to imagine that the taxation of this country to-day was the result of Labour policy. The hon. Member forgets that what started the high taxation in this country was not the Labour Government but that the taxation went up to and even above its present level long before the Labour Government came into office.

Mr. SAMUEL: When I was at the Treasury with my right hon. Friend the Member for Epping (Mr. Churchill) he reduced the burden of direct taxation and of indirect taxation. He reduced Income Tax from 4s. 6d. in the pound to 4s. The present Chancellor of the Exchequer raised the Income Tax from 4s. to 4s. 6d.

Mr. PETHICK-LAWRENCE: My right hon. Friend had to raise the Income Tax because the right hon. Member for Epping (Mr. Churchill) had taken it off when it could not legitimately be taken off. That does not dispose of the real point that I was making. The hon. Member for Farnham seemed to suggest that it was the coming of the Labour Government that had built up this heavy taxation. The heavy taxation was built up by his friends and some of the right hon. and hon. Members below the Gangway opposite at the time of the War. After the War, instead of dealing with the great burden of debt in a way that some of us on these benches advocated, they preferred to leave the debt as a millstone hanging round the neck of this country in the years which have followed. Therefore, it was owing to their policy pursued during and after the War that we are confronted with the difficulty which confronts us now.
I have been interested to note that no one has referred, except in a passing reference by the right hon. Member for North Cornwall, to the change that is being made in the position of the collectors of taxes. We have heard so much in the Press about this subject, and one or two hon. Members have put questions which
have led one to suppose that there would be a very strong feeling about this matter, but judging from to-day's Debate it would appear that that feeling, if it ever existed, has almost entirely vanished. I put that down perhaps to the circular which I, in common with other hon. Members, have received from the National Association of Assessors and Collectors of Taxes. As other hon. Members have received that circular, I only propose to read three short sentences from it. The first is in the covering letter, in which the president, vice-president and general secretary of the association say:
The proposals have been recently the subject of much ill-informed criticism.
After dealing at length with the situation, they conclude in this way:
Nothing in the proposals affect in any way the rights of the local commissioners either in the appointment of assessors, or in the making of the assessments or the hearing of appeals.
I think that will completely satisfy the right hon. Member for North Cornwall. The association also say this, which I should have thought would appeal to hon. Members opposite, who are so anxious to secure economy and efficiency in the public service. The collectors, who ought to know, say:
On the financial side careful examination has shown, that by pooling the routine work and reducing the number of responsible collectors, the cost, including the provision of compensation for collectors adversely affected, will fall, while efficiency will be increased.
I think that is a full answer to the criticism which has been made, and is no doubt the reason why we have heard so little of this question in the Debate. A number of Members on the other side have referred to the question of the Unemployment Insurance Fund and have objected to borrowing for that fund, and have made a number of adverse criticisms on the way that is done at present. There, again, I would remind the Committee that it was not the Labour Government which started borrowing for the Unemployment Insurance Fund. It was right hon. Gentlemen opposite who started borrowing, and in that respect we have only continued the practice which they began.

Mr. REMER: It was the Coalition Government.

Mr. PETHICK-LAWRENCE: Well, the Coalition Government. We have done something on the other side. They raised the whole of the money necessary by borrowing, but my right hon. Friend the present Chancellor of the Exchequer, realising that a certain proportion was not strictly within the limits of insurance, decided to transfer to the Exchequer a large part of the cost. It is because transitional benefit is now provided by the Exchequer that a large part of the difficulties of the Budget have to be met at present. I would put this question to hon. Members. What, really, does the Opposition want to do in this regard? It is all very well for them to criticise. Let me deal with one point in advance. There are, admittedly, certain abuses, and Members in all quarters of the House are anxious that the fund, which is intended for the use of the genuinely unemployed, should be so used, and that the abuses should be got rid of, though there may be differences of opinion as to the extent of the abuses. No one who knows anything of the facts imagines for a moment that if you could cut off every real abuse, it would do more than touch the fringe of the amount of money required. Therefore, the question of abuses having been swept aside, there is still left the whole problem with which we have to deal. There are three possible courses. We could transfer a large part of the cost of unemployment to the rates, but I do not believe to-day that even the party opposite would desire that.

Sir ROBERT HORNE: I should like to he quite certain about this matter. Did not the Government Actuary say that you could cut off abuses at once to the amount of £10,000,000, and is not that an important sum?

Mr. PETHICK-LAWRENCE: I do not recall the figure and, not being certain, I will not dispute it, but, even assuming for the sake of argument that £10,000,000 is the figure, though it is important, it is still only the fringe of the problem which we have to face at present, and it still leaves substantially the same problem. As I was saying, there are three courses open. Unemployment could be transferred to the rates, but I do not believe to-day that policy will be advocated in any quarter of the House.
Secondly, they could be transferred to the Exchequer. Well, something of that sort may have to be done, and it will probably have to be faced in the future. The third course is to cut off payments. Let us be quite clear which course the opposition really desires. We have made our contribution to the problem by transferring a large part of the transitional benefit, and we await what the Unemployment Insurance Commission has to suggest in the way of further action. I think that from the speeches which have been made from the Opposition it is not an unreasonable assumption that the Opposition do desire seriously to reduce benefits and cut off some of the people altogether. If that is the policy, the country should understand it.
Apart from that, the one policy which the right hon. Gentleman the Member for Edgbaston made was that, in place of the taxation being proposed in the Budget, there should be an additional tax upon sugar. I should have thought it was recognised by everyone that of all the taxes upon food which could be proposed, with the possible exception of a tax on bread, a tax on sugar would be one which would go down to the poorest people. I his is the only solid suggestion made by the right hon. Gentleman who is leading the Opposition to-day. I prefer the Budget of my right hon. Friend, and I am confident that is the view of this House and of the country as a whole.

Mr. GRAY: Those of us who have heard the greater part of the Debate will realise that our hon. Friends above the Gangway are rather caught, on the horns of a dilemma, and have not quite decided on which side they propose to come down. They find that the Chancellor of the Exchequer in his Budget has followed the example set by him by the previous Chancellor of the Exchequer, and they are therefore rather exercised in their mind as to how far they can legitimately attack a Budget which fellows the example so set, without at the same time too strongly condemning the action of the previous Chancellor of the Exchequer. It is rather interesting to observe that they regard the Budget, as I think the country has regarded it, with relief, though they suggest that some of the methods adopted by the Chancellor are very bad policy. Then they do what to me as a new
Member of the House is of continuous and perennial interest. I cannot imagine any Member of the House who is of sufficient importance to have his speeches quoted ever daring to speak at all, because right hon. Gentlemen who sit on the leading benches, whether the Government Front Bench or the Front Opposition Bench, in the course of time change places, and hon. Members on either side take excessive delight in turning up their previous speeches and quoting them against them. There is no doubt whatever that the speeches of the Chancellor of the Exchequer can be quoted against some of the measures of this Budget. If we on these benches welcome it, we do so, first of all, for the things that it does not contain. There has been a very strong attempt to press upon the people of the country an entire change in the fiscal policy of the country, not only from the point of view of employment advanced by hon. Members above the Gangway, but with a desire to raise revenue. In the situation, as we see it, I can imagine no more objectionable method of dealing with the present situation than that of a wide range of indirect taxes upon the necessities of life, upon the raw materials of industries and upon all the products which go either into industry or into general consumption.
We have heard with immense interest a speech from the hon. Member for Farnham (Mr. A. M. Samuel) who attempted to give some answer to a very difficult question which I think is exercising the minds of all hon. Members on all sides of the Committee, and that is the question of the gold standard and the relation of the level of prices as the result of the coming back into international use of a general gold standard. The hon. Member pointed out that there was no shortage of gold or of credit arising from gold, but that the difficulty arose from the fact that a number of countries, largely through internal political conditions, no longer carried the confidence of the financial interests of the world and were not able to borrow money as they otherwise would. I listened to that argument with an immense amount of interest. Possibly it has a bearing upon the depression which exists, but I doubt whether it does deal with what seems to me to be the outstanding fact that during the
period of the War we went through a period of currency inflation, common throughout the world, with a very high rise in the level of prices and that when we did revert to a gold standard the prime commodities, which are international, the metals, wheat, and wool, according to the Board of Trade figures, come back to pre-War level, and in some cases to about 10 per cent. below pre-War level. On the other hand when you come to internal prices of common commodities you find a marked discrepancy; you have a level of prices in this country 50 per cent. above pre-War. You, therefore, have a group of producers whose productions are prime commodities who have to translate these productions for themselves and their workmen on a pre-War level while all other commodities, broadly speaking, stand at 50 per cent. above pre-War.
There are two alternatives which this country and the world will have to face. We have to try and build up a policy in the use of gold which will lead to a general rise in prime commodities bringing them into some relation to the present level of retail commodities. At present I see no practical method by which that can be achieved, and the conclusion to which I have come is that the present level of wholesale prime commodities is their natural level. It will vary slightly; but the basis of it is its natural relation to a gold standard. The general level of world prices will rise or fall not merely according to the demand of each separate community but in relation to a common standard, and the common standard at present is that of gold. Therefore, unless you have art increased use of gold by some method of international arrangement you will find that the level of prices generally will rise if your production increases beyond your production of gold. One effect of the War, not generally recognised, has not been to leave the world less wealthy.
One of the most outstanding facts is that the vast waste of life, of money, of energy and strength, has been compensated for by the vast increase of productive energy during the War years continuing on into the peace years. There is no less real international wealth to-day. The real trouble is that we have this
maldistribution, and we must make up our minds to raise the price of prime commodities. I do not see any way of doing it, but if we do not do that the problem we have to face is the problem of bringing general internal retail prices to a pre-War level. I suggest to hon. Members that this is the fundamental difficulty in our trade situation and the cause of a large amount of our unemployment. It has been pointed out during the Debate that one of our troubles is that we cannot export our goods because they are too dear. But why are they too dear? It is not because the prime material costs are too dear, they are right down, but because your internal production costs are too high. Curiously enough, immediately anyone mentions that fact, people immediately fly to wages, and say, "Let us get wages down." As I view the situation, wages are coming down and have been coming down; in some cases they have come right down to bedrock. Take the wages of the miners to-day. They are a large body of workers, and if you compare their present level of wages with those of 1920 and 1921 you will find that their wages have dropped right down. Take the large group of unemployed, their wages have completely disappeared, and they have to maintain an existence on the unemployment grant.
We are faced with the fact that we have, unfortunately, a great burden of Debt resting upon us, and we are paying for that Debt at a rate which is far beyond the pre-War rate. We are paying interest on the Debt, not on the gold standard basis, but on an inflated currency basis. Before the War we were paying interest at the rate of 3 per cent., now we have to pay 5 per cent., and 4¾ per cent. and 4½ per cent. We are talking of a great conversion loan which will reduce the £2,000,000,000 5 per Cent. War Debt, optimists say, by 1 per cent., and pessimists by a possible ½ per cent. The problem we have to face is whether we are going to make a determined attack to bring our internal prices down to a proper gold standard. I believe we can do that, although it is going to be a matter of considerable difficulty and will involve temporary sacrifices in certain quarters. One thing at least is certain, and that is that to the great masses of this country, to the
workers of this country, a low level of prices is the most priceless boon that they can possess.
It is no use whatever having an artificially raised money wage which, when translated into commodities, does not buy any more. We have seen the effect of that in lost credit. We have seen a race between higher prices and higher wages, both going up. I do not profess to say which raced the other. Normally, in my experience, prices seem always to beat wages in going up, and wages seem to beat prices in coming down. I suggest to Labour Members that from their point of view it is exceedingly important that they should get retail prices down, and to Conservatives I suggest that from the point of view of trade and industry that it is an equally essential requirement. If you could bring our internal retail prices down to pre-War level, it is astounding but true that you could have an all-round reduction of money wages by 33⅓ per cent., and be in exactly the same position as you are in to-day. Anyone who examines costs knows that anything of that sort is not required. You have rents in this country far above pre-War level. You have this vast amount of Debt which is weighing upon us like a millstone. What you are faced with is the fact that without a pre-War level of prices the burden of Debt is, roughly speaking, nearly threefold what it was in 1920. Under a normal budgetary system I do not think that you Can carry that great load of Debt, if you are going to try to collect it out of the ordinary trade and industry of the country.
I congratulate the Chancellor of the Exchequer on his Budget. I congratulate him on the result of last year, which was considerably better than most of us expected. The resiliency of the trade and industry of the country is marvellous. The financial strength of this country has never been more strongly revealed than in the history of the last eight or ten years. We have carried a great burden of 1,000,000 unemployed for over eight, years. We carry the burden of 2,500,000 unemployed now. As the late Financial Secretary to the Treasury pointed out, even in this last year our surplus exports were about £44,000,000. In recent years, as examination of the investment figures shows, we have been investing more of our capital at home, and more in the
Empire, which is a very desirable thing to do. I suggest that we cannot expect, in a period of grave and terrible depression such as that through which the world has been passing, not to have been affected to a very considerable extent by that depression.
We Liberals are not the only party who have shibboleths. Our Conservative friends think that we Liberals possess the Free Trade shibboleth, but the astounding thing to my mind is the shibboleth of the Tariff Reformers and Protectionists. I heard my hon. and gallant Friend the Member for Bournemouth (Sir H. Croft) the other day dispose of the whole of our unemployment problem in a few sentences, and I wondered why we had been worried by it all these years. His remedy was so tremendously simple. We had merely to shut out £100,000,000 worth of goods from this country and we employed 1,000,000 more men. The hon. and gallant Member disposed of another 1,000,000 in an equally simply way, and I thought that he was going to put a third 1,000,000 on the land, but he suddenly remembered that there was not three million unemployed and so he put only a few thousand on the land. It was a delightful and interesting speech. But I would remind him that his party and his friends were in office for four and a-half years, and we may rightly ask why they did not solve the problem in their time.
Any of us who knows anything about trade and industry realises that trade is like charity, twice blessed—it blesses him that gives and him that takes. It is not a one-sided thing. You cannot carry on trade with an individual or with a body of individuals and have it all one-sided. There must be a return of trade. If any hon. Member supposes that it is possible to shut out £100,000,000 worth of imports and have no effect upon the exports going out of this country or upon the services that would he rendered, he must suppose one of two things—either that the people who are sending these goods are giving them to us, or that they are lending us the money to pay for them. There is no alternative. As neither of those things is intelligible, it must be obvious to everyone that the hon. and gallant Member's method of solving our unemployment problem must be put on one side.
If we are to deal with this problem of trade and industry we must deal with the gold situation and the international debt situation. If I have one grievance against Conservatives, from the party point of view, it is because of the incredible folly of the way in which they entered into our debt settlement with America. It is astounding that they agreed to pay that debt in gold. [Interruption.] Let me state the facts. If my memory is right the right hon. Member for Bewdley (Mr. S. Baldwin) went to America on this debt mission and the Prime Minister at the time was Mr. Bonar Law. I do not think that my right hon. Friend for Carnarvon Boroughs (Mr. Lloyd George), great as his crimes are said by some to be, was implicated. The issue involved is far too big to make it matter really whether it was the fault of the right hon. Member for Bewdley or whether he was simply misled, or whether we were all led into it and agreed. The important point is that what it has led to is a situation which has entirely retarded a general debt settlement.
That is the only way in which you have got the £20,000,000 that has helped the Chancellor out of his present difficulty. How is it that the right hon. Member for Epping (Mr. Churchill) when Chancellor of the Exchequer missed that £20,000,000? The reason is that they were not there. They have only become available because the Bank of International Settlements has simplified international debt payments. These great international debt payments which have been going on since the close of the War, have done more than anything else, in my judgment, to cause friction in the financial machinery of the world. What has led to our having this £20,000,000 is the fact that the Bank of International Settlements has made it possible for the dollars to be collected in Geneva, and to go out to America without having to pass through the various currencies as it were in being transferred from one country to another, and finally landed in America.
I think that we are in a position to take international action in this matter. We have already taken an action which no other country has taken. We have declared that we ask no more out of War reparation payments than we have to pay.
We have therefore, more or less, repudiated any debt payment to this country, on balance, and the time has come when we might begin to use the influence of Parliament to try to get not merely these International Bank settlements into operation, but also a much swifter settlement of the whole debt question. There will not be a full and free interchange of commodities, there will not be that free, easy flow of trade and industry throughout the world which there ought to be, until we have wiped out the great burden of these international payments which have to be passed in one form or another through the financial and industrial machine.
The Chancellor of the Exchequer in this Budget has avoided adding any additional burden to those which already rest upon industry except in regard to the petrol tax, and I think it has to be admitted that that is a burden upon industry. I do not like that tax. At the same time I take no exception to it. In the emergency in which we are placed it is much sounder financial policy to add to an existing tax than to have all the disturbance involved in levying new taxes. It is better to add to an existing tax than to spread out taxation over a large range of commodities. What is required to-day however is not only that the Treasury should refrain from laying any heavier burden upon industry but that we should endeavour, so to reform our taxation, that it will not press as hardly upon industry as it does to-day.
We on these benches raised a point in that connection last year to which I hope the Chancellor of the Exchequer will give further consideration. Last year he dealt with it rather cavalierly and called it, I think, an "unblushing subsidy." I do not quite know what unblushing means as applied to a subsidy. Blushing certainly is not easily associated with the House of Commons. We lose our modesty before we get here, and we know very little about blushing. Whether some of the lady Members could teach us the art or not, I do not know—I have not observed it myself. Whatever the adjective in this case may mean, the noun is wrong. Our suggestion to relieve expenditure upon plant and machinery does not involve a subsidy at all. It has to be allowed ultimately, and is being allowed under the system of deprecia-
tion, but the depreciation which is generally allowed to-day is quite inadequate for modern conditions. Normally, it is about 7½ per cent. on ordinary machinery, which means a life of 12 years. In the old days of well-made British machines, a machine might last 12 years, or longer, but to-day machines are out of date in a few years. It does not matter whether they will last 12 years or not. They have generally been superseded by another machine long before that period, and the rate allowed under the present method is inadequate to meet the case. It would be well worth the right hon. Gentleman's while to consider whether he should not give something like one-third or devise some means by which there would be encouragement to firms to spend money on plant and machinery, and by which they might be relieved in this respect.
10.0 p.m.
Another suggestion which I desire to make to the Chancellor is much wider in scope, but I think it is one to which we shall have to come sooner or later. It refers to the method of dealing with the War debt. If we do get back to the pre-War level of prices the burden of debt is going to become intolerable if it comes into the Budget as it does at present. I suggest that the Chancellor should consider whether we might not isolate that debt. I should like to see the War debt treated as a separate debt, and isolated from the ordinary Budget and I would serve it with the Death Duties and with the Surtax, remodelled. There would be two advantages in this. One would be psychological. The payers of Surtax would find it much more pleasant to pay that money when they were paying it definitely and solely for the service of the Debt than they find it to-day, when they think they are paying it for the service of the dole. There is a further and an economic advantage. You could then keep that service of the Debt from becoming a burden upon trade and industry. It would come mainly from the wealthy section of the community, and what was taken out of capital would go back into capital, and in the main the people who were paying the taxation used for the service of the Debt, would be paying it to themselves.
I am not working out my suggestion in detail, but if such a policy were
adopted, I think it would be found possible to bring the normal Income Tax down nearly to the pre-War level about 1s. 6d. or 2s. in £1 the while managing the service of the debt from a special fund. I am not at present Chancellor of the Exchequer, and I do not charge the right hon. Gentleman anything for the suggestion, but I submit that some special means will have to be taken to deal with this problem of the debt. What is the situation? The right hon. Gentleman the Member for Epping when he made his fixed charge said it would take 50 years. I am asking myself and I ask the Committee, is it really thought that we are going to stand that charge for nearly two generations? Is it imagined, particularly if we get back to a lower level of prices, that trade and industry can stand that vast burden for a period of 50 years? Yet the immense international interests of this country; the great financial ramifications of insurance and banking which bring to us very large revenues of one kind and another, make it impossible for us to consider anything in the nature of repudiation. Therefore, we have to find some means of financing the service of the debt without making it a burden upon trade and industry.
I wish to say, in conclusion, how highly we appreciate the fact that the Chancellor of the Exchequer was able to make the Budget speech in person. Whatever may be the political views of hon. Members, there is no question about the fact that the Chancellor of the. Exchequer is a man for whom we all have a great affection and admiration, and the fact that he is back with us, and that he hopes to take a further part in these Debates, will give universal satisfaction. Speaking from these benches, may I say that we will give full support to the Government in carrying through this Budget. We think that, in the difficult circumstances in which we are placed, it is as good a Budget as we could have hoped for. I would like to see the land taxes speeded up. I do not see why we should wait for two years for them. There may be difficulties of which we as back benchers do not know, but there is always the possibility of the prognostications that have come from this side of the House, that the Chancellor of the Exchequer has over-estimated his revenue being realised, and if he could speed up
the land values taxation and get some of it in this year, he would have something in band against that prognostication. That may not be possible, but at any rate we can promise him and his colleagues that in pressing through that legislation and this Budget, which we are glad is a Free Trade Budget, he will have the full support of members of this party.

Sir HUGH O'NEILL: The hon. Member for Mid-Bedford (Mr. Gray) has given us a, very interesting speech, and he has shown a very remarkable knowledge of the economic questions with which he has dealt with such a wealth of language. He devoted a considerable portion of his speech to telling the Committee the importance of gold, and I agree with a great deal of what he said in regard to the necessity at the present time of increasing the production of gold. I have often thought that among the measures which the Government could take to stimulate trade and help employment, they might well try definitely to help the production of gold. I wonder whether it might not be worth while for the Government to consider something in the nature of trade facilities in connection with gold production. I merely throw that out as a suggestion, because, as the right hon. Gentleman the. President of the Board of Trade knows very well, one of the most vital necessities of the world at the present time is that there should be more gold in the world.
The hon. Gentleman the Financial Secretary to the Treasury made one of his usual vigorous speeches and twitted Members on this side with regard to their attitude on the question of unemployment insurance. He said, "We are doing the best we can; what would you do?" It has been said over and over again from these benches, and there is no doubt in my mind as to the main lines upon which Members upon this side will have to approach the question of unemployment insurance sooner or later. The first thing, as the Financial Secretary himself admitted, that the present Government will have to do is that the abuses will have to be rectified, and it is admitted that there are abuses. Then obviously, you have to separate those whose insurance is properly covered by contributions from those whose benefit is not so covered, and it seems to me that in dealing
with those who receive transitional benefit and who are not covered by any insurance scheme of contributions, those people will have to become a charge directly upon the State, but that in that charge you will have to consider the real needs of those people and not give them benefit, whether or not their circumstances require it. I think that, upon those lines, sooner or later, the reform of the unemployment insurance system has to be made. [An HON. MEMBER: "Who is going to keep them?"] The State is going to keep them, I imagine, but in keeping them and in granting them benefits, proper and due consideration must be given to their own family circumstances. That is what seems to me to be obvious and the way in which the matter must be dealt with.
To come more closely to the Budget speech of the Chancellor of the Exchequer, I should like to say a word or two with regard to that portion of his speech which he devoted to the National Debt. I admired the right hon. Gentleman for his courage, because one could not help feeling that it did require a good deal of courage for him so completely to go back upon all his former sentiments. If there is one man in this country who up to now has adopted a financial policy of austere rectitude, it is the present Chancellor of the Exchequer. In his Budget of last year he went so far as to introduce a new system, under which the deficit for last year was to be met out of revenue in the following year, and we were to have £5,000,000 last year, another £5,000,000 this year, and £5,000,000 next year. But all that has now gone by the board, and not only has the Chancellor of the Exchequer been unable to deal with last year's deficit, but he also leaves the deficit this year of £23,000,000, as indeed he is practically compelled to do, to the future to take care of.
There was one point with regard to the Debt with which the right hon. Gentleman dealt, but which I do not think has so far been referred to in the course of this Debate. He said that £9,000,000 which had been received from the German Mobilisation Loan had during the year been devoted to the payment of debt outside the Budget. I wonder if the President of the Board of Trade could tell the Committee, when he comes to reply to-morrow, because obviously it is
too late to-night, what particular debt that £9,000,000 has been devoted to paying off. I must say that I did not know that there was a large amount of debt outside the Budget, and I think the Committee ought to know what the £9,000,000 of debt which is said to be outside the Budget was. I imagined that the National Debt was all part of the nation's obligations and within the Budget, and it will be interesting to know to what form of debt this £9,000,000 was devoted. The only debt that I can think of at the moment which is outside the Budget is the debt on the Unemployment Insurance Fund. That, I suppose, may be said to be outside the Budget, but I do not imagine that the £9,000,000 received from the German Mobilisation Loan has been devoted to repayment of that debt.
I should also like to ask about the Exchange Account from which £20,000,000 has been taken. As I understand the position, that account, amounting in all to £33,000,000, was created in the United States for the purpose of financing the purchase of dollars to meet the interest payments on the American debt. Up to now, the amounts which we have received from German reparations, and also I think from the payments of French and Italian War debts, was paid in sterling, and with that sterling this country purchased dollars in the United States. Now, owing to the establishment of the Bank for International Settlement, the intermediate transaction ceases, and, instead of receiving sterling and purchasing dollars with it, we now receive dollars in America direct from the Bank of International Settlement. Consequently, it is apparently possible largely to decrease the amount of the dollar exchange which used to be kept in the United States. This new procedure must surely mean that the Bank of International Settlement has to purchase dollars in the United States to a very considerable extent. Surely it requires, therefore, to keep some kind of fund over there, such as we have had up to now, to finance its purchase of dollars in the same way that we used to finance our purchase. To what extent has that, fund to be kept by the Bank of International Settlement, and to what extent has this country an obligation in reference
to any fund which is kept there in that way?
The Chancellor of the Exchequer based the main contentions of his Budget upon the fact that the present problem, as he said, is largely temporary. If the present depression was entirely due to world conditions, it might be true to say that it was a temporary state of affairs, but that is not so. When you examine the position of this country, you find that our relative position in world trade is getting rapidly worse as compared with other nations. Our share of the world export trade has fallen from 13.9 per cent. in 1913 to 10.9 per cent. in 1928, and has fallen still further since. It would probably not be untrue to say that at this moment our share of the world export trade is about a quarter less than it was before the War. That is a very serious situation indeed, and we cannot get over it by calmly saying that this is a temporary position brought about by world conditions, because it is not. Our relative position is worse; that is the serious state of affairs we have to meet. Hon. Members opposite always tell us that unemployment in America and Germany is worse at this moment than unemployment here, but we must not forget that unemployment has been almost chronic with us for the last 10 years. We have had over a million, or 800,000, or 1,500,000, or 2,000,000 unemployed almost continuously for the last 10 years, whereas the United States, Germany and other countries, where, possibly, unemployment to-day may be as bad or worse, have within that period had spells of great prosperity during which unemployment has been practically unknown.
When we come down to examine it, the reason for our present difficulties is that our costs of production are too high. Nothing will so much help towards bringing down the costs of production as a policy of economy in national expenditure. The Chancellor of the Exchequer certainly did make a passing reference to economy, and paid lip service to it as a great virtue, but I do not think that during this Debate sufficient stress has been laid upon the vital and paramount importance of more economy in this country. A month or two ago the Chancellor made a speech in which he drew attention to the gravity of the present
situation and foreshadowed the necessity for economy. He told us that everybody would have to bear a share, including Ministers of the Crown, and one thought then that the Government intended to propose some really great and definite step towards economy. It would be a help in promoting economy if some gesture were now made by the Government in relation, for example, to Ministers' salaries and the salaries of Members of Parliament. Why not? It will have to be faced sooner or later. We cannot go on meeting Budget after Budget by temporary expedients; the situation must be met sooner or later by national economy. It might bring the nation to realise the necessity of economy if some such step as I have indicated were adopted.
We have heard about the Economy Committee, and I must say that I do not expect a very great deal from them because, after all, questions of policy must be really for the Government. Such a committee as that which is at present sitting cannot do more than make a, certain number of recommendations on administrative matters which will save, possibly, a few million pounds, but which will not really go to the heart of the question. The House of Commons itself might do a good deal more towards promoting national economy if only it had the power to do so. I have often been impressed, as many other hon. Members have, with the fact that the House of Commons is utterly impotent to control expenditure, and I think that is admitted. Expenditure takes place through the passing of the different Supply Votes on the Estimates of the year, and that is the time that one would have thought the House of Commons, as guardians of the national purse, would examine the expenditure which is proposed. Supply days are devoted entirely to the discussion of questions of administrative policy. I sympathise with those who have suggested that our machinery should be reformed in this respect, either through the setting up of Committees of the House with power to examine the Estimates before they are introduced and with power to make representations in regard to policy. Some method of that kind is very desirable, and I think the House should be able to assert its rights,
and have power to suggest and carry through amendments.
The present Budget is merely a method of tiding over the crisis which is bound to arise sooner or later. Other countries are now passing through critical economic times, and the state of things in Australia shows how inexorable and relentless are the economic laws which all nations have to come up against sooner or later. It is not until this country has a Government which will really face the situation that we shall be able once again to restore our finances to a condition of soundness and prosperity.

Major ELLIOT: The good sense of the House of Commons has been shown by the fact that the Committee has very largely decided to consider the root causes of our difficulties, rather than the Budget which the Chancellor of the Exchequer has placed before us. The Chancellor has placed before us a Budget of such a temporary and shadowy character that it cannot really be said to be a Budget at all. He has transferred the financial control to two committees, the May Committee and the Holman Gregory Committee, and he has announced that he will be guided by their recommendations, not merely in administration, but in the legislation which he will propose to the House. It seems a pity, however, not to consider the Budget at all, because there are some very interesting things about this Budget which it would be worth while to consider before touching on the wider questions to which the House of Commons has devoted its attention.
There is, for instance, the Chancellor's handling of the British tariff. The Chancellor of the Exchequer, of course, is a stout tariff opponent, but the only thing that he has done in this Budget is to raise the British tariff. He has raised the tariff on petrol. It is a remarkable testimony to the strength of Tariff Reform that in fact the only thing he has done, in this so-called Free Trade Budget, is to increase the protective duties which are to be placed upon a certain product coming into this country; and he has not even, as in the case of the Silk Duty, charged a corresponding excise. He remits the excise on the home-produced article, so that this is perfectly straightforward Protection.
However, as long as he says it is a Free Trade Budget, and it appeals to hon. Members below the Gangway, so that they follow him into the Lobby to vote for this duty, it is perfectly safe.
His other handlings of the tariff are strange indeed. Hon. Members opposite are accustomed, as are hon. Members below the Gangway, to standing up at elections and elsewhere and asking candidates, "Where do you stand in regard to food taxes? Are you or are you not in favour of food taxes?" [Interruption.] I could give the answer straight away, and so could anyone. I am against food taxes, as everyone is against food taxes, or, indeed, any other kind of tax, but I would call the attention of hon. Members opposite to the fact that the Chancellor's tariff not only contains a food tax, but a food tax which is greater than all the other protective duties put together. This year the Chancellor of the Exchequer, out of a tax on food, namely, sugar, is estimating to raise a sum of £12,800,000. That is on a straight food tax, which the Financial Secretary to the Treasury contends is carried down into the accounts of the poorest of the poor. That seems to be a very odd management of the British tariff.
I can go further. I find certain new gaps in this tariff. It is thought fit that the taxes upon some articles, which are apparently too heavy and injurious, on some articles which are more important than sugar or than petrol, should be remitted. Let us look at the names of these articles. They are gas mantles, glass, cutlery, lace and embroidery. These are the subjects upon which the Chancellor has chosen to remit the British tariff, and has swept it away altogether; but the £12,800,000 on sugar remains, and it remains, according to the Financial Secretary, as a flat tax upon the grocer's shop and the food of the people.
According to the statements of the Chancellor of the Exchequer and the Financial Secretary themselves, they have remitted £683,000 of the British tariff. That is a very odd idea. Why has it been done? There is no argument at all, and no instance can be given of any reason, why the Chancellor of the Exchequer should remit these tariffs, save that an inquiry has been held into them. Any tariff which has been slammed on
without inquiry may be allowed to stay, while any tariff which has been put forward as a result of examination must be swept away. We on these benches are credited with being a stupid party, but hon. Members opposite are it seems against any kind of investigation, and they are a Government which is supposed to contain more professors of political economy than any Government which has ever existed in this country. There still remain duties to the amount of £2,260,000 on films, clocks, motor cars and musical instruments. Those are very sound, and there is no reason why these duties should be remitted, but I say also that there is no reason why £683,000 of revenue on lace and embroidery, glass, and other articles, should be remitted, if there is going to be left upon the food of the people a duty of £12,800,000, which is going to be voted for in the course of the next few days by hon. and right hon. Gentlemen opposite. Therefore, when it comes to a question of food taxes, we have a perfectly simple and straightforward answer to any question that may be raised.
That is not the only thing that the Chancellor of the Exchequer has done. In addition to this extremely muddleheaded handling of the British tariff, he has found it desirable to rob a hen roost—to do all the things which he said he never would do—to use capital as revenue. The Financial Secretary to the Treasury made a speech which, except for a few references to the Budget at the end, might have been thought to have been delivered under the impression that he was speaking some days before the Budget, and, therefore, was under a pledge not to reveal any Budget secrets. He went into this matter, however, and defended it on the ground that he was merely robbing his money-box to pay his debts. He is robbing what other people have saved up and spared in order to pay debts which he has contracted and which his own officials have commented upon in the strongest terms. The Financial Secretary went further in referring to the evidence given by Sir Richard Hopkins and Sir Alfred Watson before the Royal Commission. When challenged from this side as to whether any economies were possible at all, he did not think anything to speak of was possible. When further challenged and
asked whether the Government Actuary had not actually mentioned the figure of £10,000,000, he said, "What is £10,000,000?"

Mr. PETHICK-LAWRENCE: What I said was that such economies as could be effected by sweeping away abuses only touched the fringe of the problem and even £10,000,000 was only the substantial figure which would be in any case involved.

Major ELLIOT: That is true, but a substantial fringe is represented by £10,000,000 when a Chancellor of the Exchequer is budgeting for a surplus of £134,000. The hon. Gentleman is of all Members the most intimately connected with the solvency of the nation, the accuracy of accounts and the remedying of financial abuses. It is under his signature that all accounts come forward and are presented to the House. He did not sneeze at it! All one can say is that he sniffed at it, and the hon. Gentleman is one of the best sniffers in this Parliament.
The Financial Secretary announced that he was going to deal with the questions that have been addressed to him. He did not deal with any of them. He did not answer the questions that were addressed to him either from this or from that side of the Committee. He dealt with some in the fashion of asking questions in return. He and the Chancellor of the Exchequer are there responsible for the national accounts, and the national accounts cannot be dismissed by saying, "It is true we are borrowing £1,000,000 a week, but we made a substantial contribution to the Unemployment Insurance Fund by taking off the people on transitional benefit." It is not enough for the Chancellor to say, "We have dealt with part of the problem. We do not know what we are going to do about the rest of it." This is the annual balance sheet. What would be said of any company director, or manager, or board meeting its shareholders, or any association of people meeting those to whom they were responsible and from whom they were drawing salaries saying. "We have dealt with part of the problem. It is a very difficult problem. We have appointed a commission
that is going into it. Meantime the accounts are running up and we will deal with the matter eventually when we get the commission's report."
The hon. Member for East Leicester (Mr. Wise) brought up another extremely poignant point. What is the explanation of the fact that while the Chancellor says he has to provide £30,000,000 for transitional benefit, and the Financial Secretary himself has signed the Estimate that £30,000,000 are required for transitional benefit, Sir Richard Hopkins before the Royal Commission brings out the sum at £35,000,000 to £40,000,000, or even more? The Financial Secretary was asked by his colleague in his own city what was the explanation of that and not a word of explanation did the Financial Secretary vouchsafe in answer to him? It is not difficult to realise why the Financial Secretary shirked the matter. The answer is to he found in the Memorandum to the Bill which was introduced in this House to deal with the last borrowing and the prolongation of the transitional benefit period. For how long is the transitional benefit period prolonged? The transitional period is not prolonged for the whole of the financial year. Let hon. and right hon. Members opposite realise that the Chancellor of the Exchequer is budgeting for transitional benefit which is to begin to run off in September of this year.
This Budget is balanced on transitional benefit beginning to run off in September. Naturally the Financial Secretary shirked that fact. Will he agree that that is so? Will he agree that he did not answer that question? Will he say whether I am correct in the statements which I am making? After all, this is a point of some importance. Is the Budget covered, even on the statements which have been made, because it is a point of fundamental importance, with a surplus of £134,000? Here is the "Memorandum on the Financial Resolution to be proposed relative to Unemployment Insurance." This was a Bill brought forward in February, 1931, and Clause (b) of the Resolution proposed:
to authorise the extension by a further six months of the Transitional benefit during which benefit may be paid, … although 30 contributions have not been paid by the claimant in past two years. Under existing legislation Transitional bene-
fit begins to expire on 18th April, 1931, and comes entirely to an end on 17th April, 1932.
It comes entirely to entirely to an end in April, 1932. The Resolution postponement of each of these dates by six months. Let the Committee grasp what that means. Transitional benefit under that begins to expire about the 18th September, 1931, and comes entirely to an end—these are the hon. Gentleman's own words—in September, 1932. The paragraph goes on to say that:
Under existing legislation the estimate of the cost of Transitional Benefit in 1931–32 would be about £17,000,000, which by the present proposal, would be increased by £13,000,000 to £30,000,000.

Mr. SANDHAM: A very sound investment against revolution.

Major ELLIOT: The hon. Member for the Kirkdale Division of Liverpool (Mr. Sandham) has made the most irrelevant series of interjections this afternoon which any Member has ever made in the House of Commons, and that is saying a great deal. What are the electors of the Kirkdale Division going to say when he votes, as he is going to vote, for a proposal under which transitional benefit begins to decrease on the 18th September and comes entirely to an end on the 18th September, 1932. He does not believe it, but the Chancellor of the Exchequer is asking the House to vote his Budget on that belief. These are matters which are of the very greatest importance and have not been dealt with by the Chancellor of the Exchequer or by the Financial Secretary to the Treasury, and they must be dealt with before these Resolutions are parted with by this House. How are the inevitable Supplementary Estimates going to be dealt with 9 We have the Chancellor of the Exchequer's statement on the matter:
The Estimates for the Supply services amount to £439,000,000. In view of the appointment of the Economy Committee I trust that the actual expenditure will fall considerably below these Estimates."—[OFFICIAL REPORT, 27th April, 1931; col. 1399, Vol. 251.]
When the setting up of the committee was being debated in the House the right hon. Gentleman said that in his opinion he could write the report of the committee then. During the speech of the right hon. Member for North Cornwall (Sir D. Maclean) who proposed the Resolution, the Chancellor of the Exchequer
made an interruption and asked whether the committee would be able to recommend reductions in war pensions, or old age pensions, or the Education Vote. The right hon. Member for North Cornwall said that they would make their own investigations and their own recommendations on their own responsibility. Clearly, it was envisaged in the mind of the right hon. Member for North Cornwall that they would be able to make recommendations going so far as the specific subjects mentioned by the Chancellor of the Exchequer, namely, reductions in war pensions, old age pensions, or the Education Vote. The Chancellor of the Exchequer went very carefully into the matter and pointed out that unless substantial recommendations were going to be made, mere administrative economies would never succeed in producing the substantial cuts which he now leads the House to understand will have to finance the Supplementary Estimates such as are bound to arise in the course of the year, unless an absolute revolution takes place in the whole conduct of our financial business. He said that the greater part of the Supply Service expenditure goes in war pensions, in widows pensions, old age pensions, education, housing and unemployment, and he asked what was legitimate expenditure and whether it meant expenditure that was fixed by law. Apparently, the answer to that question was given in a satisfactory form during the course of the Debate and the nature of that answer may be seen in the far-reaching proposals which the Chancellor of the Exchequer has put forward as to the balancing of the Budget and the financing of any Supplementary Estimates which may be necessary during this financial year.
The Chancellor of the Exchequer has dealt with the matter of financial control by virtually removing it from the House of Commons, and the Financial Secretary to the Treasury backs that up. He says: "We have made our contribution. We have financed transitional benefit. As for the rest, we must leave it to the recommendations of the Royal Commission on Unemployment Insurance." Is not that a most extraordinary position for a responsible Minister to bring before the Committee in defending the Budget. The May Committee and the Holman Gregory Committee are the committees upon which the Chancellor of the Exchequer
relies to get the surplus which, apart from them, he admits he was totally unable to look forward to at the end of the year. Where is he obtaining the cash necessary to carry on until the reports of those two committees? He is obtaining it from the Exchange Fund in the United States. The amount that he has taken from that Fund is more than £20,000,000; it is £23,000,000, because he is taking a further £3,000,000 in the Miscellaneous Account in addition to the £20,000,000. He is able to do that because of the work of his predecessor. The hon. Member for Mid-Bedford (Mr. Gray) said that this was due to the setting up of the Bank of International Settlement, but the hon. Member did not follow the matter back to its root.
How is the bank able to transmit these funds? It does not produce the funds out of nothing. It gets them from the settlements with France and Italy and from the reparation settlement with Germany. When the reparation settlement with Germany was going through, and when the Spa percentages were being fixed, the Financial Secretary to the Treasury and the then Chancellor of the Exchequer were loudest in their denunciation of any money being obtained in this way. It is easy now for the Chancellor of the Exchequer now to surround himself with a wall of virtue, and to say he fought as strongly as possible for the British taxpayer at the Hague and obtained great sums there in the way of reparations; but when the Spa percentages were in the process of fixation, or just afterwards, the Chancellor, in his first speech after his return to this House, said:
It would be well frankly to abandon the idea of any reparations, for if Germany can pay, it would not be to our advantage that she should pay."—[OFFICIAL REPORT, 1st December, 1922; col. 1083, Vol. 159.]
The wheel has gone full circle, and it is to these very payments that the Chancellor of the Exchequer is looking to enable him to balance his Budget by taking money from this Fund in America.
We do not blame the Chancellor for eating his words, because many of his words are of a nature which would be well eaten. The mellowing process which seemed to have come over him in those days has come over him again in his tem-
porary seclusion. It is true that he still proposes some imposts of a nature even more stringent than he fully realises. His forestalment in January of Income Tax will fall on professional men, farmers and the small shopkeepers and clerks with peculiar heaviness, and also by consequence upon the Christmas trade. The whole of the levy is to come on at a time when the maximum expenditure is falling on the small middle-class household, and also in a year when in many cases they have already suffered reductions of salaries. For instance, a person with £700 a year, say, a small shopkeeper or small professional man, who was paying £35 16s. in tax, is now to pay £26 17s. in one instalment in January. He will pay in July £17 18s., and next January, instead of paying another £17 18s., he will pay £26 17s. The total of that will be £44 15s. for the two parts of that year. That is for a married man with one child. For a single person—and there are many people who, though nominally single, are supporting households of one kind or another, such as relations or aged parents—the tax on that income will rise from £34 16s. to £52 4s., and in the two parts of that year, instead of paying £69 12s., they will pay £87. A married man with £1,200 a year, a salary, after all, not greater than that of an Under-Secretary, instead of paying two instalments of £64, pays in January £97. A single person—and there are Under-Secretaries who are single as well as in receipt of a salary of £1,200—will have to pay £122 in one instalment alone, instead of £81.
I do not say there is anything scandalous about it, but it is a very considerable impost on a large class of people who at that time are doing their utmost to indulge in the small extravagances which make up the Christmas trade of the country. The expansion of employment which usually comes about then is just because of those small expenditures of these people, and this is exactly the sort of thing which will be hit and crippled by these imposts.

Mr. HOLFORD KNIGHT: They will have long notice.

Major ELLIOT: Take the case of the hon. and learned Member, who is a lawyer of great skill earning, no doubt, considerable sums of money by his professional talents. Say that he gets not
a penny less than £5,000 a year. Under previous taxation he would have to pay £792; now his liability will come to £1,036. In the two halves of that year he will have to find £1,500. He will have a long notice, but I do not think it will make it any sweeter or expand his desire to go in for these small expenditures at Christmas time.

Mr. KNIGHT: What I have just said is a simple matter of fact, and I think the hon. and gallant Member is a little impertinent.

Major ELLIOT: If it is a matter of impertinence to say that the hon. and learned Member may be getting an income of £5,000 by virtue of his professional talent I will halve the amount and give him £2,500, or make it a quarter and bring it down to £1,200. If that is not enough I will say that he does not earn any money by his professional talents and, has to rely on the £400 which he gets as a humble Member of Parliament. In that case his taxation is £3 12s. as against £2 8s. previously, but even that he will find is not an agreeable Christmas box to receive from the Chancellor of the Exchequer.

Mr. KNIGHT: You will have your little joke!

Major ELLIOT: We do not blame the Chancellor of the Exchequer for making use of these shifts and expedients, the situation is grave enough. A man who can stand at that Box and utter the warning which the Chancellor of the Exchequer uttered is well justified in using these shifts and expedients, but I say that he places his Budget in the hands of hon. Members like the hon. Member for Dumbarton Burghs (Mr. Kirkwood)—

Mr. KIRKWOOD: I would make a job of it.

Major ELLIOT: And in the hands of anyone who is able to force a Supplementary Estimate upon him, and in doing so he is placing his Budget on a very shifty foundation. The Chancellor of the Exchequer is in the position of a man who has been on the edge of a precipice and has looked over, and is terrified at what he has seen. He comes back with a message that direct taxation cannot be increased, that the social services cannot be improved and that at all costs the
rising tide of expenditure must be halted. That is the message of the Chancellor of the Exchequer. All honour to him for bringing such an unpalatable message to the House of Commons. But the test of the Budget is not in the preliminary sketch which the Chancellor of the Exchequer has made. The test will come in September and October and November of this year, when it will be necessary to exercise economy. When the testing time arrives he will have our support, and I hope that he will call upon it to the full.
Resolved, "That the Chairman do report Progress, and ask leave to sit again."—[Mr. T. Kennedy.]
Committee report Progress; to sit again To-morrow.

Orders of the Day — LONDON PASSENGER TRANSPORT [MONEY].

Resolution reported,
That, for the purpose of any Act of the present Session to provide (among other things) for the establishment of a Passenger Transport Board for the London Traffic Area and for the transfer to that Board of various transport undertakings and interests, it is expedient to authorise the payment out of moneys provided by Parliament of—

(a) the expenses of the London Passenger Transport Arbitration Tribunal to be constituted under the said Act, including the remuneration of members and staff of the tribunal;
(b) any additional expenses incurred by reason of the provisions of the said Act in connection with the Railway Rates Tribunal;
(c) any sums payable by the Minister into the Metropolitan Police Fund in respect of costs incurred in connection with the licensing of the drivers and conductors of certain vehicles;
(d) any expenses incurred by the Board of Trade in the granting of certificates in connection with the distribution of transport stock and money forming part of the consideration for the transfer of statutory undertakings to the said Board; and
(e) the costs, charges, and expenses preliminary to, of and incidental to the preparing, applying for, obtaining and passing of the said Act."

Resolution agreed to.

The remaining Orders were read, and postponed.

Orders of the Day — INDIA (PRISONERS).

Motion made, and Question proposed, "That this House do now adjourn."—[Mr. T. Kennedy.]

11.0 p.m.

Mr. BROCKWAY: I put two questions to the Secretary of State for India last week, regarding the Meerut prisoners and the Garhwali riflemen who are also in prison in India, and urged that in both cases the present situation in India justified their release. To those questions the Secretary of State answered that, as far as the Meerut prisoners were concerned, the trial must proceed, and, as far as the Garhwali riflemen were concerned, reconsideration would only take place at the periods usually allowed for martial law sentences. I was not satisfied with those replies, and I gave notice to the Secretary of State that I would raise the matter on the Adjournment, at the first suitable opportunity and with his concurrence, I wish to raise it to-night. I admit at once that the terms of the agreement reached between Lord Irwin and Mr. Gandhi do not, specifically include these cases, but I urge upon the Secretary of State that it would be wise statesmanship, in the present situation, if he did not follow exactly the latter of the agreement, but sought, with generosity, to carry out its spirit. I urge, further, that on the intrinsic merits of these two cases, release is justified.
I take the case of the Meerut prisoners first. The responsibility for the arrest of these 31 men must be placed upon the right hon. Gentleman's predecessor. I hope very much that if the right hon. Gentleman had been in office at that time the arrest would not have taken place and the trial would not have begun. If that be so, I suggest to the right hon. Gentleman that he should take the opportunity of the present truce in India to undo that work. He might have argued that the legal proceedings having begun, he could not interfere with them, but, surely, a new situation has now arisen in which the trial might be ended. I recognise that I must be careful in my references to this matter because the ease is sub judice. Therefore, about the charges I will only say that they were charges of conspiracy and waging war against the King; that even the prosecution has not made any charge of actual acts of violence
and that the argument has been that the ulterior and ultimate object of the trade union and political activities in which the prisoners were engaged, was one of violent revolution. I put it to my right hon. Friend that a trial of this kind is more likely to be propaganda for those who are being tried than to limit, in any way, the effect of the things which they have been doing.
In addition to the actual nature of the charge, I suggest that the actual procedure and length of the trial demand now a reconsideration of the whole matter. In the first place, the prisoners were removed from the centres of their activities, in some instances 800 miles, to where they could be tried without jury. They have been kept in prison for nearly two years under trial, and the case for the prosecution has only recently ended. The conditions of the trial have been amazing in the slowness of its progress. There is no stenographer in the court. The evidence has actually to be taken down by the Judge himself typing out on a typewriter before him. And all this time these 31 men are retained in prison under trial. The right hon. Gentleman, whose enthusiasm for political prisoners in Ireland when he was in Opposition was so great, cannot possibly be easy in his own mind to have the responsibility, as Secretary of State for India, for a trial of that kind.
I want to put to him very strongly this further point: I do not know how much this trial must be costing, but in the long run it is the starving peasants of India who are paying for it. If these starving peasants of India are to be prevented from becoming impregnated with doctrines which the right hon. Gentleman dislikes, I cannot imagine any method more likely to impregnate them with those doctrines than by compelling them, in their condition of semi-starvation, to pay for trials of the character that is now occurring at Meerut. I ask the right hon. Gentleman as strongly as I possibly can to end this scandal. We regard it as a scandal in its initiation, we regard it as a scandal in its conduct, and we ask him to be big enough and brave enough to end it now when he has this opportunity.
I want also to refer to the Garhwali Rifles. Nearly a year ago, during the disturbances at Peshawar, a platoon of
Indian soldiers, the Garhwali Rifles, were called upon to proceed against an Indian crowd. They refused to do so, and 17 of the platoon were placed under arrest. In the court-martial proceedings the officers gave evidence that the Indian soldiers used these words:
We will not shoot our unarmed brethren, because India's army is to fight India's enemies without. We will not go into the city. You may blow us from the guns if you like.
I put it to the right hon. Gentleman and the other Members of this House that, whatever views they may hold about India's aspirations, they cannot in their heart of hearts withhold admiration from men who were prepared to risk liberty and life rather than shoot upon their fellow countrymen engaged in a national struggle.
I want to put this directly to my right hon. Friend. It seems to me almost indecent for a Government, some of whose principal Members encouraged a number of us in the Great War to refuse to shoot upon Germans, now to retain in prison Indians because they are refusing to shoot upon their fellow-countrymen. I put the point to him again with the same strength as I have tried to put it in the Meerut case, that he ought to seize the opportunity of the truce to release these men from their sentences. One of them is undergoing transportation for life, another is undergoing 15 years' imprisonment, 15 other men are undergoing terms of imprisonment from three years to 10. It is to us a shame and a humiliation that we should be members of a party whose Government are responsible for maintaining sentences of that character upon men who will live in history as the patriots and heroes of India.
I beg the right hon. Gentleman to use the powers which he possesses, at any rate, now that we are reaching the end of one year's imprisonment of these men, when under normal circumstances a reconsideration of this case will take place, and to use his influence to see that they are released. Never in history has any Government or any statesman suffered through any action of generosity towards a people which is struggling for liberty. I ask the right hon. Gentleman to think of his own record for liberty, to think of his own fight that he has made
in this House for liberty, and to do his utmost, now that he is a responsible Minister of the Crown, to apply the principles of which there has been no more eloquent exponent than the Secretary of State for India himself.

The SECRETARY of STATE for INDIA (Mr. Wedgwood Benn): I do not complain that my hon. Friend has raised this matter. Nor do I doubt for one moment the sincerity of his motives, although I say plainly that I deplore some of the phrases which he used in the very difficult position in which we find ourselves in India. Some of the sentences which he used will do much harm, and I greatly deplore that a man of such transparent sincerity should be lacking so much judgment, as to use such sentences. My hon. Friend does not allege that these cases come within the terms of the Irwin-Gandhi Agreement, and therefore we are not discussing at all any suggested breach of that agreement, which, I may say, the Government are as earnest in trying to implement as I am convinced Mr. Gandhi is on his side. We are therefore dealing with the cases on their merits.
I will take first the hon. Gentleman's reference to the Meerut prisoners. The position of the Government is this. They found a case in progress, when charges had been laid in court, and the case was being duly tried by processes of law. The question was whether we should have interrupted the processes of law or have permitted them to proceed. As to that, we made up our minds at the beginning, and our opinions remain unaffected to-day, that it is not within the province of the executive Government to interfere with the process of law once it is set in motion. [An How. MEMBER: "You did it in the 'Herald' case!"] My hon. Friend made one or two comments on the character and length of the trial. I deplore the length of these trials in India, but I would remind him that it is not due to any action of this or any other Government; it is due to the character of the Code under which cases of this kind are tried in the courts. The practice is that the full evidence should be laid, not only before the preliminary inquiry, which then passes judgment as to whether the case must go to the Sessions, but that, again, it must be laid before the Sessions Court,
and elaboration of that kind does unfortunately involve very long delays. I wish it would be otherwise, and I join with my hon. Friend in deploring in general the length of these cases. Very many witnesses, running into hundreds, and very many documents, have to be examined in the interests of the accused at the preliminary stage of the investigations as well as at the trial before the Sessions Court. The result is that the accused are fully apprised on every point of the charges made against them at the preliminary inquiry, before it comes before the higher court; but that the process is long, very long, I freely admit, and, in general terms, I deplore the length of trials of this character.
As far as the prolongation of the inquiry is concerned, the position is this at the present time. The defence has been entered upon, and if it was not possible—and, believe me, I have desired it to be possible—in the prosecution stage, to shorten the inquiry, I am sure my hon. Friend would not desire, nor would it, be fair, that special measures should be taken to shorten or hamper or curtail the proceedings when these men are conducting their own defence. Therefore, it is impossible to do otherwise than to permit the case to proceed and the accused to make their defence. The Government have every desire that they should have proper facilities for their defence, and have taken a step, which is not at all unusual, in assisting in the financial defence of the prisoners. What the issue of the trial may be I cannot say, and it would be quite improper for me to make any comment, but those are the facts; and I hope my hon. Friend will agree that while I may not have been able to satisfy him the Government are not treating the case unfairly.
As to the Garhwali Rifles, that is a ease not under trial. It is a case in which a very serious charge was made. I cannot imagine a more serious charge in the circumstances in which we find ourselves in India to-day. Very severe sentences were passed. My hon. Friend speaks as if the sentences had actually been served, but the offence is a recent offence. I gave him an answer which I had hoped would satisfy him, namely, that sentences of this kind come under periodic review at short
periods, and that these sentences will be treated in that way.

Mr. BRACKEN: Considering the responsibilities of the Government of India I think it would be deplorable if men found guilty of these charges should be released on sentimental grounds under the Gandhi truce, which is being more honoured in the breach than in the observance. I wish to make one comment on the speech of the hon. Member for East Leyton (Mr. Brockway). He talks about the burden of financing such a prosecution in India. I would say to the hon. Member for East Leyton that the peasants of India are very greatly interested in these trials and that the poor men in India who are faced with the accounts of these awful recent atrocities at Cawnpore must greatly hope that proper justice will be done to those who attempt to break the peace.

Mr. BENN: On a point of Order. May I point out that the hon. Member appears to be dealing with the merits of this trial, which, surely, is out of order?

Mr. SPEAKER: I hope the hon. Member was not referring to any sentence which might be awarded.

Mr. BRACKEN: If the Secretary of Stat, had not been so anxious to intervene, I was referring specifically to the case of the mutineers who, the Secretary of State has said, are under sentence, and the right hon. Gentleman ought not to burke a discussion of this kind, which is of vital importance. I am talking about men who broke their oath, men who were found guilty of mutiny, and are now serving their sentence, which I hope they will serve in full. It is in the interests of the poorer peasants in India, towards whom the hon. Member for East Leyton is so sympathetic, that law and order should prevail in India. It would be inconceivably dangerous for any sentimental decision to be taken to release these men from prison. We have all read this morning the grave speech of the Governor of the Punjab, in which he referred to the appalling breaches of law and order in his Province. We should make it absolutely impossible for loyal servants of the Crown like the Governor of the Punjab to carry out their duty if this House were to interpose and free men who have been found guilty, not
only of breaking their oath to their Sovereign, but of fomenting trouble all over India. I must again congratulate the Secretary of State upon his firmness in resisting this invitation from the hon. Member for East Layton. At the same time, I think he is a little too ready and anxious to prevent a fair discussion on a
subject, raised from his own side, which is vital to every citizen, not only in India, but in England as well.

Question put, and agreed to.

Adjourned accordingly at Twenty-eight Minutes after Eleven o'clock.